Property owners in Greece who face real estate seizures due to unpaid public debt are increasingly using direct court authorized sales to complete transfers without obtaining a tax clearance certificate. Under Article 998 paragraph 6 of the Code of Civil Procedure, which took effect on January 1, 2026, property owners can petition a competent court to approve private real estate transfers to third party buyers outside the official electronic auction platform.
The judicial mechanism permits buyers to acquire titles clear of all financial encumbrances while restricting state debt recovery. Under civil procedure distribution rules, the Greek State and social security funds collect a maximum of 25 percent of the final contract price rather than the full debt balance.
Standard procedures for debt transactions
Under general Greek real estate practice, transferring property normally requires a tax clearance certificate issued by revenue authorities. This document certifies that the seller has no outstanding tax liabilities or that existing debts are properly structured under an active payment plan. When property owners sell real estate with structured tax debts, officiating notary publics are legally mandated to withhold a substantial portion of the sale proceeds, typically set at 70 percent of the purchase price, and transfer those funds directly to the state treasury.
If a property owner has unarranged or overdue public debts without an active settlement plan, tax authorities will not issue a clearance certificate. Instead, revenue officers issue a formal certificate of debt. Under a debt certificate, notary rules require 100 percent of the contract price to be directed toward paying off the outstanding public liabilities, leaving the seller with no remaining proceeds from the transaction.
Debtors frequently attempt to resolve state liabilities through the out of court settlement mechanism platform established under Law 4738/2020. This framework allows individuals and businesses to restructure debt owed to tax authorities and social security agencies. However, even when a debtor successfully restructures obligations through the Law 4738/2020 platform, obtaining a tax clearance certificate for a property transfer still triggers the mandatory 70 percent withholding requirement on the sale price.
Limitations of tax authority relief
Because standard tax clearance rules absorb most or all of the transaction value, property owners have had little financial incentive to engage in voluntary property sales. In some instances, sellers attempted off the books cash arrangements with buyers outside the banking system to bypass notary withholding. Legal experts strongly advise against such unofficial transactions because they expose both buyers and sellers to severe legal liabilities, tax fraud penalties, and financial losses.
To address the burden on seized assets, tax authorities introduced administrative decision A.1158/2026 to regulate transfers of real estate seized by the Independent Authority for Public Revenue, known as AADE. In a press release published on July 30, 2026, AADE stated that lifting a property seizure and completing a transfer previously required full settlement of the remaining debt balance as a general rule.
Under decision A.1158/2026, tax authorities allowed seizures to be lifted if the State received 25 percent of the underlying debt. However, Athens attorney Giorgos Psarakis noted that this reduction applies specifically to 25 percent of the total debt that led to the seizure, rather than 25 percent of the actual property sale price.
Furthermore, Psarakis emphasized that qualifying for the AADE mechanism involves a highly complex administrative process. Taxpayers are evaluated on a scoring scale ranging from 0 to 100 points based on tax compliance history, debt duration, and debt origin. Only debtors who achieve a score of 80 points or higher qualify for the 25 percent debt collection provision.
Court approved direct property sales
Given the strict requirements of tax authority regulations, property owners and buyers are increasingly relying on the free sale provisions under Article 998 paragraph 6 of the Code of Civil Procedure. Effective since January 1, 2026, this statutory provision allows a debtor whose property is under seizure to apply to the competent court for permission to sell the real estate directly to a designated third party without going through public bidding on the e-auction platform.
When a court authorizes a direct sale under this framework, the buyer acquires the property completely free of liens, mortgages, and legal encumbrances. Crucially, tax clearance certificates are not required for property transfers executed through this civil court procedure. Instead, the distribution of sale proceeds is governed strictly by the Code of Civil Procedure rules on creditor priority.
Unless the State has registered a specific mortgage on the property, public tax claims are classified as general privileged claims. Under civil execution rules, general privileged creditors, including the State and the Electronic National Social Security Fund, known as e-EFKA, receive up to 25 percent of the actual sale price. The remaining proceeds are distributed among other privileged creditors according to statutory rank. Court proceedings under this provision move relatively fast, with judicial rulings typically issued within one to three months.
Valuation standards and creditor protection
During the court proceeding, judges review the terms of the proposed direct sale to verify that the agreed purchase price is fair and does not compromise the rights of preferred creditors. The judicial review ensures that property values are not understated to the detriment of pre-notice or mortgage holders.
Under the statutory requirements of Article 998 paragraph 6, the proposed sale price cannot be lower than 70 percent of the initial starting bid price set for the property. That initial bid price is established by a certified appraiser who is selected and hired at the discretion of the court bailiff managing the enforcement process.
To ensure procedural fairness, mortgage holders and pre-notice creditors are formally summoned to appear at the court hearing. This enables secured lenders to present evidence and submit their views regarding whether the proposed sale price reflects true market value.
Risks and proposed legal safeguards
While court approved direct sales facilitate property transactions, the process forces public revenue agencies to accept smaller recoveries than they would obtain through standard tax clearance or debt certificate procedures. This outcome has raised concerns regarding potential procedural loopholes.
Psarakis warned that the current framework could allow bad faith actors to stage fictitious or artificial seizures. Under such tactics, friendly creditors could seize properties based on low initial offer prices simply to bypass state debt collection and defeat public financial interests. The risk becomes acute if the interests of mortgage creditors fail to align with those of tax authorities.
To protect public revenue, Psarakis proposed introducing a legal requirement making it mandatory to summon both the State and e-EFKA to every court hearing for direct property sales. Requiring state representatives to participate would allow judges to evaluate official state positions on property valuations before issuing sale decisions.
