The initial step for acquiring a property must be establishing the maximum budget that would be available for acquiring the property. If bank financing will be required we can set up a meeting with any of the local banks to discuss the matter. As an indication a home loan would cover 70% of the purchase price and completion costs. A property insurance will be required as well as a life insurance at least covering the amount of the loan.
When establishing the maximum budget one must ensure that all costs are taken into consideration such as bank charges, stamp duty and professional fees.
Once a prospective buyer finds the appropriate property and reaches an agreement with the seller a preliminary agreement is drafted. The preliminary agreement (also referred to as ‘a promise of sale agreement’) binds both the seller and the buyer to a set of mutually agreed terms and conditions, such as:
- Payment terms
- Works to be undertaken by the owner (if any) and
- Building permits
- Bank loan approval to acquire property
- Verification of soundness of the premises by an architect of the buyer’s choice
The Preliminary Agreement is typically valid for three months but it can be shorter or longer depending on the agreement between the two parties. Once the preliminary agreement is signed, an appointed notary (who is a public official) would carry out the necessary searches on the property to ensure that there are no outstanding debts, hypothecs or liens on the property and that the vendor has legal title to the property he wishes to sell.
Typically, the buyer would pay a 10% deposit to the seller, which may be kept by the notary if so agreed, until the final deed is signed. The said preliminary agreement is registered by the notary with the Maltese Public Registry.
Final contract of sale
Provided that the public searches by the Notary are in order, and where applicable the bank sanctions the loan, and the architect’s report is clear; the notary shall proceed with the drafting of the final deed of sale. This shall result in the transfer of ownership and physical possession of the immovable property. The notary is also responsible for registering the final deed with the Maltese Public Registry