Pitfalls of Buying Property in Malta

If you're considering buying a property in Malta, there are a few things you really need to know beforehand. It can make all the difference.

Buying a property in Malta should be a pleasure, an absolute joy, but too often people come to Malta short on information. When you're talking about the sort of serious money a house costs, of whatever size, it's up to you to take due care. If you end up choosing a Maltese house that has problems you're the one who has to live with it.

 

What could go wrong?

So many things can go wrong when buying a property in most countries

1.  The Property comes with a defect in title: You might be signing with a person who is not the rightful owner. The selling party might either be fraudulently entering the sale contract or else might honestly believe he was  e.g. the rightful heir but wasn't! If the owner is a company, likewise, the risk may be higher and only after the necessary independent checks can the rightful title over the property be ascertained.

2. The property might be subject to a lien or warrant: Where a creditor has obtained a judgment against a property owner (the seller), the creditor is entitled to and may have registered a lien over the property which remains in effect against your new property if the sale goes through.

3. The property might be subject to a servitude: a property might be legally burdened by a number of property rights, including the right of a third party window and light from your own property, a right of passage, a right to access or use you roof for a water tank or antenna, etc.

4. Rights to sublet: you might be buying a property in an area where subletting might not be allowed for foreigners holding the type of residence permit that you have obtained to cover your presence in Malta.

5. Structural defects and planning irregularities: being property built with methods that you might not be familiar with or unique old properties dating from the times of the Knights of St John, structural defects may not be evident and, while the law provides protection in cases of latent defects, you don't want problems after buying your home in Malta.  Also, any improvements that look reasonable and acceptable to you might still be illegal and may not be covered by a planning permit.  You may end up having to forgo extensions or structures in the house that you had initially fallen in love with.

 

So how can you take the pitfalls out of buying a Maltese property?

 

Tip Number 1

Know who stands for what: understand the transaction.  Who are the parties to the contract and where do the other involved parties come in? What are their interests and what are yours?  Who represents who?

1. The Buyer - that's you! Your interest is to ensure that you're buying a structurally sound property that has a clean legal title, all planning permits in order, and with the rights, possibilities and defects that you are AWARE of and happy with.

2. The Seller - the interest of the seller is to sell validly what he owns at the highest possible price.  He may omit to provide information that may affect the value or your perception of the property.

3. The Notary Public  - the notary is a public officer entrusted with the enrollment of public deeds such as the purchase and sale of immovable property.  He is an impartial party in the agreement and should not advise any of the parties.  It is the Notary's duty to disclose all facts concerning the property as emerge from the legal acts processed by him as part of the transaction.  The notarial profession is very respected and upright, subject to exceptional cases where notaries tied to property developers (sellers) or estate agents (agents for the sellers) might have an interest to 'expedite' the title-verification process possibly overlooking material defects in title.  As an inbuilt safeguard, the law entitles the Buyer to appoint the notary, and Buyers are advised to avoid being convinced to use the seller or estate agent's notary.  The buyer will pay the notarial fees anyway and is therefore entitled to use a notary recommended by the Buyer's Lawyers.

4. The Estate Agent  - the main interest of the estate agent is to sell the property and that the deal goes through.  While most estate agencies ensure their property consultants follow good ethical and professional standards, the real estate profession is not regulated in Malta and it is not unheard of for estate agents to be tempted to sell at all costs and to overlook defects of any type concerning the property.

5. The Lawyer for the Seller - the seller is entitled to legal representation and advice on the resale of his property.  This ensures that his interests are being safeguarded in the final contractual negotiations made in conclusion of a contract in front of the notary public. Remember, you may soon end up in the position of a Seller and your rights and interests will be seen to by your lawyer.

6. The Lawyer for the Buyer: your lawyer's role is to protect and enforce your interests, empower you in the negotiation process by providing legal advice and information, advising on the legal and tax implications of the specific transaction and on the legal vehicle being used to acquire the property (trust, company, direct), if any.  In the event that you are unable to be present on the date of the signing of the preliminary agreement or final deed of sale, it is quite common for the Buyer to authorise his lawyer to represent him under Power of Attorney, attending and signing the contract on you behalf.

 

Choosing your lawyer

While any lawyer is likely to take on a property transaction, you are advised to choose a lawyer who specialises in property transactions as well as immigration law.  While most lawyers will be versed in the basics of property law, in the case of foreign buyers, it's important for the lawyer to also be aware of the rules specific to the ownership, transfer and subletting of property by a foreign resident under one of a number of residence schemes and permits available under Maltese law.

Foreign buyers are often tempted to reduce the transaction costs by doing away with legal representation or choosing a lawyer based on the fee quoted.  Remember that you get what you pay for and, compared to the far higher price you are paying for your house, saving a small percentage looks silly when considering the serious risks that this involves.  A good lawyer will step you from entering a property purchase that you will regret or, where possible, a competent lawyer will offer solutions that address the defects or obstacles encountered in a satisfactory manner.  If no solution can be found to material defects in title: DO NOT BUY.  You will otherwise live to regret it.

Now no amount of expertise in Maltese is going to have you understanding the processes and paperwork for buying a property in Malta. It will certainly help, but you need to do some research as well. The Maltese do love their paperwork.

In general, to turn pitfalls into pleasures when buying a property in Malta, all you have to do is take a personal interest: ask questions and make sure you understand the answers. It's easy to get drawn into the atmosphere and the excitement and forget common sense. Don't. This is far to big a decision to be made without all your wits about you.

 

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