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Real Estate Due Diligence in Malta

Real Estate Due Diligence in Malta

During the last years, Malta has successfully enabled citizenship programs involving the purchase of real estate property. Considering these programs have certain requirements such as a price ranges for the properties to be bought, real estate due diligence procedures have become quite important. Whether it is for commercial or private use, the property should be thoroughly checked before signing the sale agreement. There are a few procedures that enables one to verify the Maltese property about to be purchased. The first real estate due diligence procedure implies the verification of the property with the Maltese Land Registry and the second refers to an architectural inspection of the property. In order to benefit from a simplified and speedy procedure foreign citizens or investors may also appeal to the services of a law firm in Malta which is will also explain the legal aspects of buying a property in this country.

Our lawyers can help natural persons and corporate clients with legal real estate due diligence which is one of the most important procedures before acquiring real estate in Malta.

The main types of real estate due diligence procedures in Malta

In the last few years, the number of procedures which can be completed before buying a property has increased as the number of persons purchasing real estate for residential or vacation purposes has exploded. This is also the case of Malta which has also enabled several residence by investment programs which provide for foreign citizens to buy real estate properties.

Based on these programs, it even more important to ask for real estate verifications in Malta. Here are the most important types of real estate due diligence which can be performed before buying a property in Malta:

  1. the Land Register verification which can also be defined as the legal real estate due diligence;
  2. technical or architectural real estate due diligence which implies having the property inspected by a construction specialist or an architect;
  3. financial due diligence which implies checking a property for financial encumbrances, such as mortgages or even unpaid bills;
  4. zoning and survey due diligence which is usually required for commercial real estate purchases.

There are various types of verifications which can be completed on a property in Malta before acquisitions, however, the ones mentioned above respect all the aspects which need to be checked before completing an important transaction.

Our law firm in Malta can help you with the legal and financial real estate due diligence as we can perform various searches with the Land Register in order for you to be sure you have made a good decision.

Real estate verification with the Malta Land Register

The first step towards purchasing real estate in Malta is to sign a promise of sale contract. After signing the agreement it is the best time to start the real estate due diligence process. Whether one decides to appeal to the services of a Maltese public notary or law firm, this verification should be done with the Land Registry. The information to be found out from the Maltese Land Register refers to:

  • –          the legitimacy of the property title,
  • –          if the property is subject to any mortgage payments,
  • –          if any third party has rights over the property,
  • –          if the property is rented.

In case of opening a company in Malta and the property will be purchased for commercial purposes it is also advisable to verify the activities that could be undertaken in such building and if all permits and licenses are in place.

Technical verification of a property in Malta

Once the real estate due diligence procedure started it is also advisable to have its structure verified. In order to do that the future owner could appeal to the services of an architect who will clarify all the structural aspects of the building. This way the buyer will make an informed decision. This aspect is quite important in case of commercial purchases in order to ensure the safety of employees.

Financial real estate due diligence in Malta

As mentioned above, financial real estate due diligence implies verifying a property for encumbrances and other issued related to the payment of bills, mortgages and even rent. For many people a financial real estate due diligence is not important because the Land Register verification offers sufficient information on the respective property. However, our attorneys in Malta would like to draw the attention of persons and even companies that in some cases a property can be used as collateral when contracting a loan. Usually, such loans imply large amounts of money, so a verification with the local tax office in the Maltese city the property is can prove very useful.

Another unpleasant situation is for the owner to be subject to a debt collection procedure completed in a Maltese court of law. Such a case can lead to a judge ruling for the property of the defendant to be used for paying the debt.

These are the main reasons and common situations a buyer can deal with when acquiring a property in Malta. The case can get even more serious when commercial purposes are involved because of significantly higher price of such as real estate. Moreover, in commercial real estate purchases where more than one building and land plots are involved, a financial verification is necessary.

Our Maltese lawyers can offer tailored solutions to those who want to buy properties but want to have them verified prior to the acquisition. This implies for us to perform the searches clients want us to or for our lawyers to propose a set of verifications which can be completed.

Why is real estate due diligence important?

As we presented it above, real estate due diligence can have a huge impact on the decision of the buyer. No matter the type of property to be purchased or who the seller is, due diligence can even impact the price of the property.

We also recommend people buying newly built houses or apartments to have the respective property verified at least technically.

Another important aspect related strictly to real estate due diligence in Malta is the purchase of a property under the Residence by Investment Scheme. It is good to know that under this program, the properties rented or purchased must be evaluated and the rent or the acquisition values are specified by the regulations in the program.

If you are interested in joining this program, our Maltese law firm can help you with all the formalities.

The Maltese real estate market

If you plan on buying a property in Malta, you should know that:

  • – in 2018, property prices increased by 16.9% (the report was completed between the second quarter of 2017 and the second quarter of 2018);
  • – Maltese banks usually ask for an advance of 10% to 30% to those seeking to obtain a loan for buying a property;
  • – 80% of the Maltese citizens are owners of at least one property;
  • – an 8% transfer tax is levied upon the purchase of a real estate property in Malta.

Purchasing a property in Malta is not a complex process, especially if you choose our legal services. Regardless of the type of property chosen, the documents will be checked by our specialists, to discover if they are in order or if there are disputes that need to be resolved first of all. We also recommend clients from abroad choose our services in order to be able to sign the transaction documents if they cannot travel to Malta. A power of attorney will be necessary for this endeavor, and we can take care of all the formalities in this sense.

For real estate due diligence procedures and legal assistance in buying a property you can contact our lawyers in Malta.