Purchase a Property in Estonia
Purchase a Property in EstoniaUpdated on Wednesday 27th May 2015
Who can buy real estate properties in Estonia?
Estonia provides good investment opportunities when it comes to real estate properties mainly because foreign citizens or companies have the same possibilities to purchase properties as Estonian citizens do. There are only few restrictions when it comes to foreign entities wanting to purchase a real estate property in Estonia. Foreign investors or citizens residing outside the European Unions are not allowed to buy real estate properties on four Estonian islands (Saaremaa, Hiiumaa, Vormsi and Muhu) and are not allowed to purchase over 10 hectares of forest or agricultural land plots.
Measures before buying a real estate property in Estonia
The most important step when purchasing real estate property in Estonia is to verify the owner and the property to be bought. The buyer is advised to check if the property is registered with the Estonian Land Register. According to the Estonian laws, real estate properties not registered with the Land Register are considered movable properties. The property must also be checked for encumbrances, such as mortgages. The buyer is also advised to verify if the owner has any unpaid bills or debts with the authorities.
Our Estonian lawyers can help you with a thorough real estate due diligence process before making your purchase.
The contract for purchasing an Estonian real estate property
After checking the property to be bought, a reservation contract will usually be concluded between the seller and the buyer. The reservation agreement does not compel any of the parts to sell, respectively to buy the property but it offers the buyer priority if other persons are interested in purchasing the same property. A pre-purchase contract can be concluded in front of a public notary in case the final agreement cannot be concluded right away. This way the buyer makes sure the Estonian property will enter in his or her possession after concluding the final purchase contract. The pre-purchase agreement will usually contain the terms of the sale, the price of the property and if any deposit has been made. When signing a pre-purchase contract a sum ranging between 10-20% of the total price of the property must be paid. The final step for buying the Estonian property is to sing the purchase contract. The contract must be signed in front of a public notary.
Registering the property with the Estonian Land Register
Once the new owner has purchased the property, he or she must pay the registration fee and then register the property with the Estonian Land Register. The application form to be submitted with the Land Register must be notarized. According to the Estonian laws, a real estate property tax will be levied depending on the value of the land plot the property is built on and it ranges between 0.1 and 2.5%.