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Finance providers

What are the typical providers of real estate financing in your jurisdiction? Are there any restrictions on who may provide financing?

Financial institutions are the typical providers of real estate finance.

Debt financing on a commercial scale is reserved for licensed credit institutions. Restrictions as to the providers of equity financing in real estate are uncommon, but may apply by reason of the nature of the investee entity (eg, real estate investment corporations) or the location or features of a particular property.

Financing structures

What are the most common structures used to secure real estate financing and how are these security interests perfected?

The most common type of security is a mortgage on land and buildings. A mortgage affords the secured lender the right to collect proceeds from the liquidation (ie, forced sale) of mortgaged assets with priority over other creditors (other than so-called ‘generally preferred’ creditors that have priority by operation of law). Mortgages are registered by agreement between the security taker and the property owner in the form of a notarial deed and are perfected by way of registration with a land registry or cadastral office. Such registration must specify the property being encumbered and the secured claims, as well as the amount for which such security is registered. In the event of several mortgages registered on the same property, a prior mortgage has precedence over a subsequent mortgage.

Greek law also permits a creditor to register a prenotation of mortgage. Rules on mortgage proper also apply to prenotation, but:

  • prenotation is generally registered by virtue of a court order issued on injunction proceedings;
  • prenotation provides the benefit of security only once it is converted into a mortgage; and
  • conversion is retroactive and conditional on the secured claim being validated by a final court judgment or order and requires a relevant registration of conversion. 

What covenants are typically made in financing agreements?

Covenants typically relate to the project’s completion, maintenance, insurance and financing (including loan-to-value ratios).

Enforcement of security

How are security interests enforced in the event of default?

Enforcement proceedings differ by type of creditor (eg, special provisions exist for banking institutions) and executory title. Enforcement proceedings typically go through the court and result in a forced sale (ie, liquidation) of the affected property.

What is the typical timeframe for the enforcement of security?

The timeframe varies according to the particulars of the security. Banking institutions may generally use special legislative provisions that shorten the overall timeframe for enforcement. Court involvement usually results in severe delays of enforcement proceedings.

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