In this issue we will examine the following issues of property, family and business law in Greece:
-Joint ownership of real estate: Rights and Obligations of Owners
-Is it against the law to keep pets on your property?
-An overview of the child adoption process
-The setting up of a branch of a foreign company in Greece
Is a parent who has been granted custody allowed to relocate abroad with the child? Who is responsible for the defects and restoration expenses of leased property? We will also provide an overview of Greek Inheritance law and discuss the effect of European Union Regulation 650/2012 on cross-border inheritance issues.
Due to the ongoing financial crisis, disputes among landlords and tenants that regard property and real estate matters in Greece about the non-payment of rents are among the most commonly faced court disputes today. Quite often the owner of leased property, despite all possible efforts made by the tenant to pay the rent, is ultimately faced with a situation where he is required to seek the payment of rent and the eviction of the tenant through the Greek court system. In such cases, he has the following options to choose from: (a) to issue a court order for the payment of rents and the eviction of the tenant or (b) to file a suit against the tenant.
In this article we will outline the basic features of these procedures as well as the rights of all parties involved.
A.Court Order for the Payment of Rents and the Eviction of the Tenant
What are the rights of the landlord?
The procedure for the issuance of a court order (“Court Order”) for the payment of rents and the eviction of the tenant is a rather quick procedure in which no court hearing is required. The Court Order is not a decision of a court that is issued after a hearing of the parties involved, but instead it is an order of the Judge of the competent court of the area where the leased property is located.
The Court Order is usually issued within twenty days. It is also particularly important to note that the payment of utility bills can be added to this order, provided that the landlord has a written receipt of their payment.
The requirements for the issuance of a Court Order for the payment of rents and the eviction of the tenant are the following:
By means of this out-of-court notice, the tenant is summoned to pay the rents due and / or any other expenses such as utility bills. It should be noted that if the tenant pays his debts within this time period, the Court Order cannot be issued, unless it can be proven that there is a repeated delay of non-payment of rents. According to the relevant case law of the courts, such delay exists when there is a delay in payment of rents on at least two different occasions and the owner has contested these delays, even if he has not proceeded with court proceedings against the tenant. Furthermore, according to recent case law of the Supreme Court, the financial difficulty of the tenant is not considered as being a reasonable justification for the non-payment of rents.
It should also be noted that there is no longer any obligation to submit to the Court a certificate that the rents of the last two years have been declared in the tax return. It is also not required to produce an ENFIA certificate for the payment of property tax of the leased property in order to issue this Court Order.
The Court Order is enforceable after a twenty day period after its notification by a bailiff to the tenant. Therefore, twenty days after its notification, the landlord may proceed with the eviction of the tenant with the assistance of the bailiff. If the tenant has left any of his belongings in the leased property and after they have been duly registered by the bailiff, the landlord has the obligation to keep them for a period of six months.
What are the rights of the tenant?
In the event that a Court Order has been served to the tenant, the tenant has the right within fifteen working days to file an appeal against it. During this time period, the tenant cannot be evicted from the property. The grounds of opposition that the tenant has in this case can regard the procedural issues that pertain to the issuance of the order or to other issues that regard the validity of the claim itself, such as proving that essentially there were no rents due.
However, the filing of an appeal against a payment order does not suspend the execution of the Court Order. In order to do achieve this, the tenant must file for a suspension hearing and request an interim injunction. The Court will grant the suspension of the execution of the Court Order if it is considers that it will be overturned by the appeal. In this case and upon the request of the tenant, enforcement of the Court Order shall be suspended until the court decides upon the appeal.
B. The filing of a lawsuit against the tenant
What are the rights of the landlord?
Quite often, the requirements for the filing of a Court Order are not met, for example, when the lease cannot be proven by written agreement. In these cases, the only other option left for the landlord, is to file a lawsuit against the tenant in order for a decision of the court to be issued. Contrary to the Court Order, this procedure can be time-consuming as well as costly since it requires a hearing before the Courts. It also should be noted that the hearings of such lawsuits are usually set within a few months of the filing of the law suit and the decision of the Court can then take months to be issued.
What are the rights of the tenant?
As we mentioned above, in the case that a tenant is served with such a lawsuit, the tenant should be aware that this court procedure will require a considerable period of time for the decision to be issued. Until such decision is issued, the tenant is not required by law to abandon the leased property. In the proceedings that will take place, the tenant will be required to prove that that the lawsuit was filed on unsubstantial grounds, i.e. the rents have been duly paid. When the decision is issued, the tenant retains the right to file an appeal against this decision which can furthermore add to the delays of this procedure.
Finally, it should also be noted that after the cancellation of the possibility to assign uncollected rents to the Greek State (in order avoid their taxation) and under certain conditions, the amounts from uncollected rents are not assumed as being taxable income for the landlord, if up until the deadline for submission of the annual income tax statement a Court Order has been issued or a claim has been filed against the tenant.
Based on the above, it can be concluded that whenever an owner of leased property is faced with a situation where a tenant delays or does not pay the rent, he could initially consider the possibility of reaching an out-of-court settlement with the tenant. In the case that this is not possible, the pros and cons of the above court procedures must be assessed in order to decide upon the most appropriate procedure to be followed.
In the Summer issue of our newsletter we examine the following legal issues as well as others that are of a common interest:
In the recent years, there has been a great development of Private Companies (Ιδιωτική Κεφαλαιουχική Εταιρεία «ΙΚΕ»), also known as “companies of one euro”. These companies were introduced by virtue of Greek law n. 4072/2012 as amended by law n. 4155/2013.
Due to the minimum cost required for their establishment and simplified operation, they are designed to meet needs of SMEs by establishing a more flexible and simple corporate type of company.
The main features of the IKE company that make it a popular choice for those who wish to establish a company in Greece are the following:
How is the Company Established?
IKE companies can be established with a private document by one or more persons through the “One-Stop Shop” of the General Electronic Commercial Registry (GEMI). The establishment of the IKE with a notarial act is necessary only in the case that this is required by law or in the case that a partner of the company contributes immobile property to it. If the folder with the submitted documentation is complete, the IKE can be established on the same day.
The IKE Company must also acquire a corporate website within one month of its establishment. All modifications of the Statute (i.e. corporate changes, change of address, purpose, etc) are done exclusively through the GEMI or corporate website, without the presence of a notary public and the obligation to publish in the Government Gazette. The duration of the IKE company -if not defined in the Statute- is for a twelve year period.
What capital is needed?
One of the main advantages of the IKE during these times of financial crisis and inability to locate sources of funding, is that the only capital needed for the establishment of the company is the sum amount of one (1) euro. In this way, the party wishing to participate in a business initiative could seek other ways to contribute to it, besides the means of capital payment.
Where can the company seat be located?
IKE is headquartered at the place referred to in its Statute, but is not obligated to have its registered office in Greece. Furthermore, it is possible for the IKE to have its seat of administration in Greece and develop its financial activity (real seat) in another country.
Who can be an administrator of the company?
IKE’s administrator can only be a natural person who does not necessarily have to be a partner of the company.
What can be the purpose of the company?
IKE can have a business purpose like those of other companies but it can also have a non-commercial purpose.
What can be the company name?
The company name of the IKE could be either an objective one, which means it can be formed according to the purpose of the business, or a subjective one, based on the name of one or more of the partners, or a combination of the above. It could also be fictional. Regardless of the company name, the law requires the mention that it is a “Private Company” so that those those who deal with the company are aware of its formation and type.
What is the extent of liability of the partners?
The IKE company is only liable with its assets for its corporate obligations, with the exclusion of the case where liability has been undertaken by the partner with guarantee contributions. This limited liability, demonstrates the advantages of the IKE company as compared to other corporate forms. More specifically, it presents a flexibility compared with other Greek company partnerships (OE-EE), where there is a partner responsible in an unlimited way (even with his own property) for the debts of the company.
What are the necessary contributions from the partners?
The contributions of the partners of IKE can be of three kinds: (a) capital contributions in cash or goods, (b) non-capital contributions which are services that are to rendered. These services must be specified in the Statute and executed for a definite or indefinite period. The value of the contributions undertaken either at the moment of the establishment of the company or at a later moment are also specified in the Statute, (c) guarantee contributions, which consist in undertaking liability against the company creditors for the company debts, up to the amount which is specified in the Statute. The value of any guarantee contribution should be specified in the Statute and cannot extend beyond 75% of the liability undertaken by the partners against creditors of the company.
The diversity of how contributions are paid is one of the main innovations of IKE and introduces an exception to the present obligation that exists with other corporate forms of Greek companies where contributions can only be made in cash and in assets.
The IKE Company shares. How are the shares transferred?
According to the law, all kinds of contributions are divided into shares of the same nominal value. However, only one type of contribution can correspond to each shareholder. The partners can choose a company that consists of capital contributions or a company with predominant personal contributions, such as employment contributions and undertaking responsibility for the debts of the company. In any case, in an IKE there must be at least one shareholding which represents the capital contribution.
The transfer of shares can take place throughout the founders lifetime or by an act of last will. However, a partner with non- capital contributions and/ or guarantees, may not transfer these shares unless they are first purchased by the shareholder. It should also be pointed out that prior to the transfer of shares, it is required to submit to the relevant tax office a declaration for tax at the rate of 20% for profit made by the transferor.
What is the current taxation of the company?
The income of the IKE is taxed at the source at the rate of a 26% tax. Profit of the IKE is then subject to a withholding tax of ten percent (10%). By means of this withholding tax all tax obligations are fulfilled for this income derived from the IKE. The tax withheld is attributed to the relevant tax office with a declaration that is submitted within the next month from the month of the withholding.
In this issue we will examine the following: family law, including legal issues of divorce and custody of children in Greece, new legislation for airbnb-type rentals, ENFIA tax, the recognition of foreign court judgements in Greece as well as commonly faced legal issues with tenants.