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					THE CREDIT SECURED BY A MORTGAGE IN EUROPE: REPORT REGARDING
GREEK LEGISLATION

From Cathérine Cotsaki

INTRODUCTION

At present, in the business sector among others, where the obtaining of a loan from a Credit
Institution often becomes a strong necessity due to the difficulty of the concerned person(s)
to gather the funds needed to establish an enterprise, to promote their activities, etc the
warranties, which the borrower is in a position to offer have a major importance inasmuch
as they are determinant for the obtaining of the loan.

A person may need a loan not only to establish an enterprise, but also to buy a house, a car
etc. In these cases as well, the warranties, which the concerned person is in a position to
offer to the lender, are determinant regarding the obtaining or not of the loan.

Besides the loan, the necessity of a warranty arises when one of the contracting parties
grants to the other a credit, especially in case of purchase of movables or immovables.

The warranties are of various kinds. In the frame of the present report, we shall examine
only the real securities granted on immovables according to Greek Legislation to secure the
payment of a specific amount, regardless to whether it is linked to the reimbursement of a
loan or to the settlement of a debt.

I. THE MARKET OF IMMOVABLES AND THE JUDICIAL SECURITY

The cases of chattels having a very high value cannot be excluded. Yet, the immovables
have, in general a higher value than the movables. This is only one of the reasons for
which, in all the countries, the Legislator has taken care to set forth strict and mandatory
rules regarding the sale of immovables, the acquisition of the title of property thereof, their
construction etc.. Regarding movable(s), their possession gives valid grounds to the third
parties to assume that the possessor is the proprietor of the thing(s). This does not apply to
immovables, i.e. no such assumption is admissible even regarding third parties being in
good faith. Actually, the Legislator has set forth rules allowing any concerned third party to
check with certainty who is the proprietor of one or more immovables in which he is
interested for one reason or another.

   1. ACQUISITION OF TITLE OF PROPERTY

1.1. Article 1033 of the Greek Civil Code provides that, for the transfer of the title
of property of an immovable, an agreement is needed between the proprietor and
the person who is to acquire the title of property, pertaining to the transfer of the
title of property for a justa causa, i.e. due to sale, donation, exchange or
otherwise. The causa of the transfer must be mentioned in the agreement and it
must be one of those accepted by Greek Legislation. For instance, the fiducia is not
a valid causa of transfer of the title of property of an immovable under Greek
Legislation.

The agreement must be in the form of a notarial deed, which must be registered in the
Registers of the competent Land Registry being the one in the territory of which the
immovable is located. The registration’s purpose is the publicity needed to allow any third
party to verify who is the proprietor of a specific immovable. Thus, the protection of third
parties is safeguarded.

It should be noted that, although the registration is necessary in order for the transfer of
the title of property of an immovable to be achieved, it does not remedy other legal
defaults, which prevent the transfer according to what will be exposed below.
1.2. By application of article 1034 of the Greek Civil Code, for the transfer of the
title of property of a movable, an agreement of the concerned parties is needed,
which however must neither be in the form of a notarial deed, nor registered. The
parties are obviously free to sign a notarial deed in order to proceed to the
transfer of the title of property of a movable, but this occurs very rarely, unless it
is – exceptionally – imposed by the Law.

The agreement of the parties regarding the transfer of the title or property of a
movable can be oral, except in some cases where the Law imposes an agreement
in writing. For instance, in case of transfer of the title of property of ships and
aircrafts, the Law requires a written agreement, which can be in the form of a
private contract, but must be registered in the Maritime Registry or in the Aircrafts
Registry, respectively.

In order for the title of property of a movable to be transferred, the relevant thing
has to be handed by the transferor to the acquirer. The tradition of the possession
is the material act which confers a publicity, upon which third parties may rely,
provided they are in good faith. Actually, article 1036 sets forth a rule according to
which the acquirer of a movable according to article 1034 becomes the proprietor
thereof even in case the relevant thing does not belong to the transferor provided
the acquirer is in good faith.

By application of article 1037, the acquirer is in bad faith if he knows that the movable does
not belong to the transferor or in case he ignores this due to gross negligence.

1.2.1. It accrues out of the above that the title of property of an immovable can be
transferred only by its legitimate proprietor. Otherwise, the transfer does not take
place even if the transferor, who falsely represents that he has title of property on
it, has the possession of the immovable and even if the agreement between the
parties regarding the transfer of the title of property of the immovable is done by
virtue of a notarial deed, which is duly registered thereafter. Further, the good
faith of the “acquirer” does not remedy the situation.

Consequently, any concerned person, who wants to verify whether a physical person or a
legal entity is actually the proprietor of an immovable, cannot satisfy himself only by
verifying whether the notarial deed by virtue of which the person in question has acquired
the immovable has been duly registered. He must – in addition – verify whether the
precedent proprietors had valid title of property regarding the specific immovable. To this
end, the titles of property of the previous transferors must also be verified, until a period of
twenty (20) years backwards as of the day on which the verification is done is covered by
means of valid and duly registered titles.

If the previous titles had legal defaults, they might possibly have been set off due to
extraordinary acquisition by possession even in case the person(s) who proceeded to the
transfer of the title of property of the immovable were in bad faith when they “acquired” the
immovable, provided twenty (20) years at least have elapsed since then Extraordinary
acquisition by possession is provided for by article 1045 of the Greek Civil Code.

In case a precedent transferor was in good faith, the title of property might have been
acquired by means of ordinary acquisition by possession, which is achieved after possession
of the immovable during ten (10) years based on (article 1041 of the Greek Civil Code,
provided the possession of the immovable is grounded on a legitimate title. A putative title
is sufficient for the ordinary acquisition by possession to occur, in case the good faith of the
possessor is justified.

Anyone claiming that he has acquired the title of property of an immovable by means of
acquisition by possession (ordinary or extraordinary) must prove that he or his principal(s)
had the possession of the immovable in a continuous and permanent way during the above
period(s) of time (respectively), with the intention of acting as owner(s). That is to say that
the concerned person should prove that twenty (20) or ten (10) years respectively have
been completed as of the day he or any of his principals started having possession of the
immovable with the intention of acting as owner(s) thereof.

In the light of the above, the mere possession of an immovable (without the intention to act
as owner thereof) by virtue, for example, of a lease contract, does not lead to the
acquisition of the right of property on an immovable by possession (ordinary or
extraordinary acquisition) since, in such cases, the possessor has acquired physical power
over the immovable by virtue of an agreement with the legitimate owner (or a third person
acting with his consent), who has granted to him (the possessor) a right allowing mere
possession of the immovable. The presence of the lease contract (or similar agreements
pertaining to the causa of the possession) do not allow the possessor to claim that he acted
as an owner of the immovable.

The acquisitive possession is interrupted by loss of the possession. But, if the possession is
recovered within one (1) year (or even later provided legal proceedings have been
instigated within one (1) year as of the loss of the possession), the interruption is
considered not to have occurred (article 1048 of the Civil Code). By application of article
1051, any person having acquired the possession of a thing as a general or a particular
successor in title may add to the time of his own acquisitive possession the time of the
acquisitive possession of his principal(s).

Consequently, good faith and bad faith are important also regarding immovables, but only
in order to fix the time of acquisition by possession of the title of property thereof.

1.3. The Registers where the deeds, by virtue of which real rights on immovables
are created or transferred, are transcribed, are accessible to any interested
person, but the verification must be done through a lawyer. This is mandatory.
Actually, the Law provides that only lawyers are authorized to proceed to
verifications in the Registers of the Land Registries, at the entry of which a plate is
affixed in this respect.

The legal fees of the lawyers for the verification of the title of property of an immovable are
fixed, by virtue of mandatory legal dispositions to a minimum of one and 0,5 per cent (1,5
%) calculated on the “objective value” of the immovable. The meaning of the “objective”
value is given below. The above fees include also those regarding the drafting by the lawyer
of the notarial deed pertaining to the transfer / acquisition of the title of property on an
immovable and his attendance at the signing of said notarial deed.

Some thirty (30) years ago, the Law has imposed to any contracting party entering into any
notarial deed (and not only into notarial deeds related to the transfer of the title of property
of an immovable or to the creation of a real right related to an immovable) the obligation to
be assisted by a lawyer practicing in the territory of the same Court as the Notary Public
before whom the deed is executed. The deed is prepared based on a draft done by the
attending lawyers.

The attendance of a lawyer for each contracting party is necessary when the value of the
object(s) of the notarial deed exceeds forty four thousand and twenty (44.020) euros (being
the equivalent of fifteen million (15.000.000) drachmae) when the object(s) in question are
located in the Department of Attica or of eleven thousand seven hundred and thirty eight
(11.738) euros (being the equivalent of four million (4.000.000) drachmae), when they are
located in any other Departments of the Greek Territory.

The deed may be executed before a Notary practicing in any location of the Greek Territory
and not necessarily before a Notary practicing in the territorial area where the immovable
(in case the notarial deed is related to an immovable) or, more generally, the object of the
notarial deed is located.

A notarial deed may also be executed before a Greek Consul accredited in another country,
since our Consuls act as Notaries abroad. In case a deed related to the transfer of the title
of property of an immovable is executed before a Greek Consul abroad, the Greek Consul
has the obligation to attach to the deed all the documents which the Greek Notary should
attach to it, if it was signed in Greece. More particularly, he must attach to the deed a copy
of the property transfer tax return. The tax in question is in charge of the buyer. The parties
may agree otherwise, but such an agreement cannot be opposed to the Public Treasury, the
claim of which is in any case secured by the immovable itself, both regarding the acquirer
(since the Public Treasury has a general privilege on all the movables and immovables of all
its debtors) and also regarding the precedent proprietors – among whom the transferor – as
far as claims of the Public Treasury against the precedent proprietors related to the three
(3) last years preceding the transfer of the property of the immovable are concerned.

The calculation of the property transfer tax is done based on the «objective value»
attributed to the immovables by the Ministry of Finance. Some twenty (20) years ago, a
system was introduced in Greece according to which the Ministry of Finance fixes a specific
value per square meter for plots of land or buildings, which varies depending on the place
where they are located. At present, this system is applicable regarding almost the entire
Greek Territory. The practical usefulness of said system is important. Actually, before it was
put in force, the concerned persons used to declare as value of the immovable any amount
they considered appropriate. The Tax Office almost never accepted the amounts declared by
the concerned persons and used to fix the value of the immovable, which constituted the
basis for the calculation of the tax, by reference to comparative data, i.e. based on the
values which had been declared by other persons regarding immovables located in the same
region and had been accepted by the Tax Office or values that the Tax Office had attributed
to other immovables located in the same region, which had been accepted either voluntarily
by the concerned persons or by virtue of judgments rendered by the competent
Administrative Courts. Most of the times, a compromise was reached between the
concerned person(s) and the Tax Office, but the persons liable to pay the tax had often to
make a recourse before the competent Courts when they considered that the value
attributed to the immovable by the Tax Office was excessive. What is exposed hereinabove
still applies in case of immovables located in regions where the system of the «objective
value» is not yet applicable. Such regions are very few at present and in a very short time
the system of the “objective” value will be applicable in the entire Territory of the country.
To be noted that, in spite of readjustments which the Ministry of Finance is authorized by
Law to make every two years, the “objective” value is usually much lower than the market
value of the immovables.

As stated above, the Ministry of Finance is authorized to review the «objective values»,
which it attributes to the immovables. In general, such a revision ends to an increase. Yet,
during the course of the twenty (20) years of the existence of the system under discussion
there was one revision, which ended to the decrease of the «objective values».

Obviously, in case the consideration of the transaction, which is declared by the concerned
contracting parties, is higher than the value of the immovable accruing out of the calculation
based on the Tables of «objective values» prepared by the Ministry of Finance, such higher
amount shall constitute the basis for the calculation of the tax concerning the transfer of the
property of the immovable.

In case of sale by a construction enterprise of buildings (houses, apartments, stores etc..)
based on a construction permit issued by the competent Urbanism Office after January 1,
2006, there is no more transfer tax to be paid. Instead there is a VAT to be paid, which is
calculated at the rate of nineteen per cent (19%) on the sale price or on the “objective”
value, whichever is higher. Given that the property transfer tax rate ranges between seven
per cent (7%) and eleven per cent (11%), it is clear that the purchase of an immovable
constructed after January 1, 2006 is now more expensive. Yet, the above do not apply to
the sale of immovables taking place after January 1, 2006, where the seller is a physical
person or a legal entity having constructed them occasionally, i.e. not acting on a
professional basis. The property transfer tax and not the VAT still applies to such sales of
immovables.
In case of further transfer for onerous cause of the title of property of an immovable
acquired for any legal cause whatsoever after January 1, 2006, neither VAT nor property
transfer tax is levied, but a special tax called « transaction tax », which is calculated at the
rate of one per cent (1%) on the value of the immovable or on the consideration price,
whatever is the higher. The above apply regardless to whether the immovable, which is
transferred, is a newly constructed or an « old » one. As a matter of fact, the « transaction
tax » is to replace gradually the property transfer tax. When this will be achieved, the total
amount to be paid by a buyer to acquire an immovable will be much lower. However, the
amounts, which will thus be « lost » for this reason by the Public Treasury, will be
compensated by the amounts it will collect from the sellers, since a capital gain tax has now
been introduced again as of January 1, 2006. The capital gain tax is calculated on the
amount representing the difference between the consideration of the acquisition of the
immovable and the consideration of its sale.

The rates of the tax in question are the following :

a. twenty per cent (20%) in case the vendor had title of property upon the immovable
during a period of five (5) years as of its acquisition.

b. ten per cent (10%) in case the vendor had title of property upon the immovable during a
period of fifteen (15) years as of its acquisition.

c. five per cent (5%) in case the vendor had title of property upon the immovable during a
period of twenty - five (25) years as of its acquisition and

d. zero per cent (0%) in case the vendor had title of property upon the immovable during a
period of more than twenty – five (25) years as of its acquisition.

1.4. As exposed hereinabove, the transfer of the title of property of an immovable, as well
as the constitution of a real right upon an immovable are achieved only when the relevant
notarial deed is recorded in the relevant Registers of the Land Registry in the territorial area
of which the specific immovable is located. There is a Land Registry in the territory of each
District Court.

Contrarily to what applies in case of transfer of the ownership of a movable, the real rights
of third parties burdening an immovable are not extinguished due to the transfer of the
ownership of the immovable, unless the title of property thereof is transferred following a
sale by public auction.

2. THE LAND REGISTERS

Registers keeping and organization, information contained in the Registers and
other connected matters.

2.1. Each Land Registry keeps various Registers regarding the property rights upon
immovables, the real rights upon immovables, the various real charges burdening an
immovable, as well as the legal actions having as object an immovable.

a. More precisely, in each Land Registry there is, first of all, an alphabetic Index, in which
all the persons being proprietors of immovables located in the territorial area of the specific
Land Registry are listed. Next to the name of each physical person or legal entity included in
said Index, there is one or more numbers, which are the number(s) of the «box» or
«boxes» of the concerned person.

b. In case one wishes to check whether a person has actually rights on a specific
immovable, he will first peruse the alphabetic Index in order to find out the number of the
«box» or «boxes» of the concerned person. Thereafter, he will go and find the Register(s)
including the box(es), in question, which contain the following data : (a) the serial number
of the deeds registered in the name of the person whose titles are verified, (b) the
references (especially the number and the date) of the each act which was registered, the
name and the surname of the Notary when the act is in the form of a notarial deed or the
name of the Authority having issued it, in case, for instance, of a judgment, of an
Administrative Decision etc., by virtue of which the transfer of the title of property has
occurred, (c) the surface of the immovable(s), (d) the nature of the immovable(s) (plot of
land, building etc.. and, in case of a building the mention whether it is a house, an
apartment etc), (e) the relevant rights (ownership right, usufruct right, habitation right,
easement etc..) and the percentage for which said right belongs to the concerned person,
whose name, surname, father’s and mother’s name, profession and address are noted on
top of the box, (f) the legal object of each registered act (transfer of property, constitution
of a real easement, constitution of undivided property rights on the same building, which is
divided into separate undivided horizontal properties or upon a plot of land, which is divided
into separate undivided vertical properties, cancellation of a real right etc.) and the
qualification (purchase, inheritance etc) of the legal causa of the acquisition of the right in
question, (g) the exact location of the immovable, (h) the number of the Volume of the
Property Transfer Registers, where each act (notarial deed or otherwise) has been
registered and the corresponding page(s) and serial numbers and (i) the references of the
title by virtue of which the transferor of the right of property of an immovable or the person
granting a real right on an immovable in favour of another has acquired his rights on the
specific immovable.

c. In case there are in the box registrations regarding more than one immovables, the
person proceeding to the verification will locate the inscription regarding the immovable to
which he is interested. Based on the data of the relevant entry, he will trace the deed(s),
which he has to peruse. The perusal of said deed(s) will allow him to find out the precedent
proprietor of the immovable from whom the present proprietor has acquired his rights. The
lawyer doing the verification will follow exactly the same process for the precedent
proprietor(s) i.e. Index, Register of boxes, review of the box(es) of the concerned
person(s), finding out in the appropriate box the entry regarding the specific immovable,
searching in the Volume and in the page indicated in the relevant entry the deed by virtue
of which the precedent immediate proprietor has acquired title of property of the immovable
and so on for all the precedent proprietors, until twenty (20) years at least are covered
backwards. Actually, in case it is established that in the period of twenty (20) years
preceding the date of the verification, the ownership of the immovable has been legally
transferred from person to person, it can be validly assumed that the right of the present
proprietor cannot be contested, since an action for revendication - if any - would fail even in
case the title of property of the present “proprietor” on the specific immovable is not valid,
since the present proprietor would validly raise the plea of acquisition of the title of property
by possession, regardless to whether he was in good faith or not at the moment when he
acquired the possession of the immovable, according to what was exposed hereinabove
regarding the extraordinary acquisition by possession.

d. When the various transfers of the ownership have been done by means of acts which are
legal – even only apparently (such as in case of a putative act, when, for instance, the
notarial deed of sale is signed on behalf of the vendor by a representative, who acts by
virtue of a power of attorney, which has been revoked and the buyer is not aware of the
revocation) and which have been legally transcribed, the present proprietor may claim that
he has acquired title of property by possession ten (10) years after the possession over the
immovable started being reminded that the possession may have started when a principal
of the present owner has got possession of the immovable. The present proprietor shall
have to prove that, both himself and the precedent proprietors were in good faith in
considering that the person having «transferred» to them the ownership of the immovable
had actually title of property over it, which will be often difficult to be proved. This is why, in
order to be absolutely sure, one should cover the period of the twenty (20) years preceding
the contemplated transfer of the title of property of the immovable, since same would then
have been acquired in any case by extraordinary acquisitive possession.

e. Besides the Property Transfer Registers, the Land Registries keep Mortgages Registers,
Attachment Registers and Revendications Registers, where the mortgages and the
prenotices of mortgage, the attachments and the revendications and other legal actions are
registered, respectively.

f. Regarding the classification of mortgages attachments, revendication actions and other
judicial actions having as object an immovable or a real right regarding an immovable, two
different systems are applicable at present by the Land Registries in Greece.

i. According to the first system, the alphabetic Index, which mentions the box(es) of the
person whose titles are verified, contains three (3) additional columns: the first concerns
the mortgages and the prenotices, the second the attachments and the third the actions of
revendication, the actions seeking to dissolve an undivided ownership between several
persons and any other legal action which, according to the relevant legal dispositions, has to
be transcribed.

In case the immovable in encumbered by a mortgage, the number of the Mortgages Volume
is mentioned in the corresponding column, as well as the number of the page and the serial
number of registration of a summary of the act (notarial deed, Court judgment, etc…) by
virtue of which the mortgage was constituted. These data allow to trace the summary of the
deed by virtue of which the mortgage has been constituted. The summary in question
contains the references of the Mortgages Volume where the entire act pertaining to the
constitution of the mortgage can be found. In case the mortgage has been lifted, a relevant
note will be found in the margin of the summary of the transcription. Said note contains the
references of the act by virtue of which the mortgage was lifted, the date of the
transcription of the relevant act and the references of the Mortgages Volume containing said
act. The note is dated and signed by the Registrar of Mortgages.

What is described hereinabove regarding the registration of mortgages applies also to the
registration of attachments and of revendication and other judicial actions, in the sense that
the registration procedure is the same.

What is exposed hereinabove regarding a possible lifting of mortgage(s) is also applicable to
attachment(s), as well as to any judicial action, which has been transcribed, in case same
has been accepted or rejected by means of a final judgment. In case there is no note in
margin of the registration of a legal action, this means that – in principle - the action in
question is still pending and that one should find it at the office of the Court’s Clerk (unless
it was not striked out due to negligence or even to ignorance of the concerned person(s)).
The big problem regarding the various judicial actions having as object immovable(s) arises
when the case has been tacitly abandoned by the claimant, i.e. without any formal waiver
from it. If twenty (20) years have not yet elapsed as of the day of the last procedural act
regarding the case, there will still be a risk that the claimant decides to continue the legal
proceedings, which he had instigated. If twenty (20) years have elapsed as of the
commencement of any legal proceedings, any legal action instigated by any person
regarding any right(s) he claims to have on a specific immovable becomes time – barred
and the right(s) in question are extinguished even on the assumption that they ever
existed.

Mortgages continue to burden the immovable on which they have been registered, as long
as they have not been lifted, even if the immovable is transferred to a third party and even
if the acquirer is in good faith. However, in case the immovable is sold in public auction the
mortgages and any burden(s) encumbering it are extinguished. An immovable is sold in
public auction following an attachment thereof by any creditor or in case the mortgagee
activates the procedure of materialization of his security (mortgage). The procedure of the
sale by public auction may be activated by any creditor of the owner of the immovable,
provided he has obtained an enforceable title regarding his claim, based on which he may
attach – possibly among other assets – a specific immovable belonging to his debtor. The
instigation of the attachment procedure, which ends to the sale by auction of the attached
immovable (unless the claim is otherwise settled) does not grant to the unsecured creditor
any privilege or preferential right regarding the settlement of his claim.

Any attachment of an immovable can be lifted by means of a judgment of the competent
Court rendered following a relevant application of any person proving to have a legal
interest in this respect, if one year has elapsed as of the day of the registration of the
attachment without conversion of it into a compulsory attachment in case of a conservative
attachment or, in case of a compulsory attachment, if the attached immovable has not yet
been sold in public auction.

We will revert more in detail below to the above issues concerning especially, the activation
of the procedure of materialization of his security (mortgage) by the mortgagee.

ii. The second system consists of the classification of the charges encumbering an
immovable in an alphabetical Index different than the one where the physical persons and
the legal entities being proprietors of one or more immovables are listed. This other
alphabetical Index contains, in different columns of its pages, the references only of the
Registers where the charges – if any – are recorded. In this second system, after having
verified the tiles of property according to the process described hereinabove, one has to
check the alphabetical Index of the charges, in which only the persons whose immovables
are encumbered with any burdens whatsoever are listed.

What is exposed hereinabove regarding the verification of the titles of property of an
immovable, as well as of the burdens – if any – encumbering it –will not be of essence in a
few years, after the Cadastral System shall be established in the entire Greek Territory,
since, according to it, the immovables and not the persons shall be identified in one box
each one of them, where both the act(s) by virtue of which title of property on the specific
immovable has been acquired, transferred etc…, as well as the burdens encumbering it shall
be transcribed. At present, the Cadastral System is applicable only in a very few regions of
the Greek Territory.

3. ACTS SUBJECT TO TRANSCRIPTION

3.1. By application of articles 1192 and 1193 of the Greek Civil Code, the following
acts are subject to transcription (registration) in the relevant Registers of the
competent Land Registry :

- the deeds inter vivos including donations mortis causa whereby a real right on an
immovable is constituted, transferred of abolished. Said deeds must be in the form
of notarial deeds

- the Court decisions acknowledging ownership or attributions or confirmations
made by the Authorities regarding the ownership of an immovable or a real right
thereon.

- the Minutes regarding the division of an immovable by virtue of a relevant
judicial procedure.

- the Court judgments, which cannot be attacked before a higher Jurisdiction (final
judgments) and which order that a declaration of will be done relating to a
transaction having as object real rights connected to an immovable.

- the deeds pertaining to the acceptance of an estate or of a legacy, to the extent
that thereby an immovable belonging to the estate or a real right thereon or a real
right on the immovable of another person has been transferred to the heir(s) or to
the legatee(s) or if such a right has been thereby abolished.

In the cases mentioned hereinabove, the lack of transcription shall result in the non –
transference of the ownership of the immovable or the non – constitution, transmission or
abolishment of a real right on the immovable.

The title of property is transferred and the real right is considered to have been constituted
as of the day on which the relevant act has been transcribed in the relevant Register(s).

Yet, according to articles 1846 and following of the Greek Civil Code, in case of inheritance
the property right or any other real right on an immovable of the estate are considered to
have been acquired by the heir or the legatee(s) as of the day of the demise of the
principal, subject to the legal dispositions governing suspensive conditions. Actually, the
devolution by succession occurs by effect of Law as of the day of the demise. The heirs may
renounce expressly the estate within four (4) months if they reside in Greece or within one
(1) year in case the deceased principal had his last domicile abroad or in case the heir(s)
resided abroad when they became aware of the devolution, provided they have not got
involved in the administration, the maintenance etc.. of the assets composing the estate. In
case there is no renunciation in the form prescribed by the Law, the estate is considered
ipso jure accepted. The acceptance of the estate or of a legacy has to be done by virtue of a
public deed in order for it to be transcribed in the relevant Registers. More precisely, the
acceptance of any inherited immovable(s) has to be done by means of a notarial deed or by
means of a declaration to the Clerk of the competent Court of First Instance. Regarding the
acceptance of the movable(s) contained in the estate, a certificate stating the heirs and the
rights of inheritance of each one of them, which is issued by the Clerk of the same Court as
above in execution of a relevant judgment of said Court, is sufficient. The judgment is
rendered at the request of one, some or all the heirs and – theoretically at least – of any
person proving to have a legal interest regarding the issue of the above certificate.

By application of article 1208 of the Civil Code, lease agreements having a duration of more
than nine (9) years have to be transcribed in the Registers of the Land Registry in the
territory of which the immovable given on lease is located. The obligation of registration
does not apply regarding commercial and professional leases governed by Law no 813/1978
as amended, codified, reamended and in force to – day.

Any transcription in the relevant Register(s) of the competent Land Registry is null and void
in case the identity of the immovable does not result from the act, which was transcribed.

3.2. The transcription consists of the registration in the relevant Registers of a
summary of the deed subject to transcription. The transcription is done in the
chronological order of submission of the act to be transcribed. The summary
contains the main data of the deed. The transcription is also confirmed on the
transcribed deed, which is kept by the Land Registry. The acts which are
transcribed are classified in Volumes.

The demand for transcription is formulated either by the Notary before whom the deed was
executed in case of notarial deed(s) or by any person having a legal interest in this respect,
who – in this case – may act either personally or through his attorney – at – law.

The Land Registrar has the obligation to deliver copies, certificates or summaries of the
contents of the Registers to any person(s) requesting such documents. The relevant
demand(s) may be signed directly by the concerned person(s) and not necessarily by their
lawyer.

3.3. In case a deed, which was concluded by error or by means of fraud or threat, has been
transcribed and – after having been attacked – was cancelled by a final Court judgment, a
note concerning the judgment in question is entered in the margin of the summary of
transcription of the deed, in the box of the successful litigant. The consequences of the
cancellation occur as from the day the above note is duly recorded.

The cancellation of a transcribed contract related to an immovable, which was
concluded by error or following a fraud or a threat does not entail the suppression
of the real rights, which were acquired by third parties based on the contract in
question. That is to say that, in the above mentioned cases, the cancellation has
effects only between the contracting parties.

3.4. In the event of several applications for transcription, if the Land Registrar has not been
able to make all the transcriptions on the same day, he shall draw up a report regarding the
applications, which have not been entered in the relevant Register(s). Said applications are
listed in the report in question in the order of their submission. Their transcriptions in the
relevant Register is done according to the rank of their entry in the above report. The Land
Registrar cannot proceed to other transcriptions before having done these ones. Such
transcriptions are deemed to have been done on the date of the above mentioned report.

Between several transcriptions done the same day regarding rights having as object the
same immovable, priority is given to the transcription which is based on the older title, even
if the difference in time is minimal.

4. RECOURSES AGAINST THE LAND REGISTRAR

By application of the dispositions of article 791 of the Greek Code of Civil Procedure, in case
the Land Registrar refuses to proceed to the transcription of a deed or of a decision related
to the constitution, the transfer or the abolition of real rights or by virtue of which
attachments, law – suits, oppositions etc are to be registered or lifted, he has the obligation
to mention, in the margin of the Register in which he would have done the transcription, his
refusal to proceed to same, as well as the reasons to which his refusal is due.

The dispute deriving out of the refusal of the Land Registrar is ruled by the Court of First
Instance in the territory of which the Land Registrar has his seat (Land Registry), following
an application of any person proving to have a legal interest in this respect. Said application
is entered in the same Register as above. The judgment is notified by diligence of the Clerk
of the Court to the Land Registrar, who has the obligation to act according to what was
ordered by the Court. In case the application is rejected, the relevant judgment is entered
in the same Register as the application.

The transcription, the noting or the lifting, which are done based on said judgment, are
deemed to have been done as of the day on which the relevant application was initially
submitted to the Land Registrar.

Equally, in case the Land Registrar refuses to deliver copy of an act which has been
transcribed, a summary thereof or a certificate regarding its transcription, the same Court
as above decides - upon application of any concerned party whether the Land Registrar has
or has not the obligation to deliver the requested documents.

On the contrary, there is no specific recourse against a transcription done by the Land
Registrar following a relevant application. The Land Registrar checks whether there are
apparent defaults in the act, which is to be transcribed, due to which he should not proceed
to the transcription. Once the Land Registrar has checked the above and decided that there
is no obstacle to the transcription, he proceeds to it. Once the transcription is done, it can
be striked out only if it (the transcription) is declared null and void because it was done
against the Law, by virtue of a judgment rendered in this respect by the competent Court or
in case the act itself, which was transcribed, is declared null or is annulled by the competent
Court following an ordinary procedure instigated by any person having a legal interest so as
the act or the transcription be annulled or declared null. This is not a procedure against the
Land Registrar, but a procedure instigated – for instance – by the precedent proprietor of
the immovable against the buyer, by the donor against the beneficiary of the donation, by a
heir who by Law is the beneficiary of a compulsory portion of the estate and who has been
put aside by means of a will, which he has attacked as being null in whole or in part, against
the other heirs etc...

II. THE IMMOVABLE THINGS AS WARRANTIES OF A LOAN.

1. CHARGES AND REAL SECURITIES AND THE IMPORTANCE

THEREOF.

Article 973 of the Civil Code enumerates in a restrictive way (numerus clausus) the rights
granting a direct authority on the thing against any third party. Theses rights (real rights)
are : (a) the ownership, (b) the easements, (c) the pledge and (d) the mortgage.

The ownership may obviously relate both to movables and immovables. The
easements are related only to immovables. A pledge can be constituted exclusively
on movables, while a mortgage can be constituted – save some exceptions – only
on immovables. Exceptionally, a mortgage can be constituted on a ship, on an
aircraft or, by application of the dispositions of Law number 4112/1929, on the
machines which are tied up to the soil, when a mortgage is constituted on a plot of
land belonging to an industrial company as a guarantee regarding a loan granted
to it. Usually, the loan will be a Bank loan.

In the following lines only the easements and the mortgage will be examined.

1.1. EASEMENTS.

The easements are either real or personal.

a. real easements.

An immovable can be encumbered (servient immovable) in favour of another immovable
(dominant immovable), with a real right securing an advantage (real easement) to the
dominant immovable. For instance, the servient immovable can be burdened with a real
right of way, of conveyance, of drainage, of drawing up of water, etc…in favour of the
dominant immovable. The real easement is constituted in favour of the dominant
immovable in the sense that in case the owner thereof changes the easement shall continue
to exist in favour of the new owner. On the contrary, personal easements are constituted in
favour of a specific person only, being the proprietor for the time being of the dominant
immovable.

The real easements are constituted either by means of a notarial deed, which is transcribed
in the relevant Register of the competent Land Registry or acquired by ordinary possession
(exercise of the right by one or more persons being in good faith based on a legal title even
putative, who possibly succeed to each other (the term “succeed” being taken here in the
broad sense and not in the sense of the inheritance only) for ten (10) years) or by
extraordinary possession (exercise of the right during twenty (20) years, even if the
person(s) exercising it are in bad faith).

b. personal easements.

An immovable can be burdened with real right(s) of personal easement(s) attributing to a
given person a certain authority or usefulness regarding the servient immovable.

b.a. As a matter of fact, by application of article 1188 of the Greek Civil Code, whatever
constitutes the subject matter of a real easement may constitute the subject matter of a
personal easement, but the relevant utility is granted to a given person and not to a specific
immovable (dominant immovable) as it is the case for real easements. The personal
easement is consequently tied up to the beneficiary and not to the dominant immovable.
For instance, the right of conveyance, which would burden an immovable in favour of a
given physical person or legal entity only, would be a personal easement. In case the
beneficiary would disappear, the easement would extinguish ipso facto. On the contrary, if
the right of conveyance encumbers the servient immovable regardless to who is the
proprietor of the dominant immovable, the easement remains valid in favour of the
dominant immovable even if its proprietor changes for any reason.

The personal easements provided for by Greek Legislation are the usufruct, the habitation
right and the limited personal easements.

b.b. The usufruct.

The personal easement of usufruct consists of the real right of the usufructuary to make full
use and to collect the fruits of a movable or an immovable thing belonging to another
person, provided the substance of such thing is integrally preserved.

The usufruct on an immovable is constituted either by means of a notarial deed or by
acquisition through possession (ordinary or extraordinary). When the usufruct of an
immovable is constituted by means of a notarial deed same must be transcribed in the
relevant Register of the competent Land Registry.

The usufruct of an immovable is acquired through possession in the same way as the
ownership of an immovable.

The usufruct can be constituted also on an undivided part of an immovable.

The usufructuary has the obligation to restitute the immovable to the proprietor at the end
of the duration of the usufruct.

The usufruct cannot be transferred unless otherwise agreed. On the contrary, the exercise
of the right of usufruct can be transferred to another person for a period of time not
exceeding the duration of the usufruct.

In case the usufructuary dies, the usufruct is extinguished. The usufruct which is constituted
in favour of a legal entity ceases with the disappearance of such legal entity.

A usufruct is extinguished upon it being merged in the same person with the right of
ownership. For instance, when the usufructuary dies, the right of usufruct merges in the
person who was the so called «nake» proprietor of the immovable as long as the
usufructuary was alive. Usually, the «naked» proprietors shall be the heirs of the
usufructuary.

The usufruct is extinguished by a unilateral declaration of renunciation addressed by the
beneficiary to the owner. With regard to immovables, the declaration must be in the form of
a notarial deed, which must be notified to the owner and transcribed in the relevant
Register of the competent Land Registry. A mortgage can be constituted on a right of
usufruct.

According to the prevailing opinion, an usufruct right can be attached regardless to whether
it has been agreed that the usufruct right can or cannot be transferred. We take the liberty
to state that we consider more accurate the opinion according to which an usufruct right can
be attached only if it has been agreed that it can be transferred. Actually, if an usufruct
right would be attached, it should thereafter be sold in public auction. It would be then
acquired by the best bidder. This would be in contradiction with the rule set forth by the
Law according to which a usufruct right cannot be transferred unless it has been agreed
between the person having granted such a right and the beneficiary thereof that the right in
question is transferrable. When can be attached without any possible contestation because
it is provided for expressly by the Law is the exercise of the right of usufruct, which is
acquired by the adjudicator, who may keep it for as long as the right in question remains in
force.

b.c. The habitation right.

The personal easement of habitation consists of the real exclusive right of the beneficiary to
use a building or an apartment therein as habitation.

The beneficiary of the habitation right is entitled to inhabit the building together with his
family and a domestic personnel corresponding to his social position.

The habitation right cannot be transferred and it is extinguished by the demise of the
beneficiary.

The dispositions governing the usufruct of an immovable are applicable, mutatis mutandis,
to the right of habitation provided they are compatible with the nature of said right.

As stated above, besides the possibility to acquire them by possession, either
ordinary or extraordinary, both the real and the personal easements are
constituted, transferred or abolished by means of notarial deeds, which must be
duly transcribed in the relevant Registers of the competent Land Registry. More
precisely, the transcription is done in the same Registers and in the same way as
for the acts regarding the constitution, the transfer etc of a property right
regarding an immovable.

2. The easements, with the exception possibly of the usufruct, do not present any interest
whatsoever as potential means of guarantee of a loan. As a matter of fact, the mortgage
is the only burden on an immovable which can be a tangible security of the claim it
warrants.

2.1. The mortgage.

A real right of mortgage can be constituted on an immovable in order to secure a claim. The
creditor is satisfied by way of priority on the immovable. The mortgage is an accessory
right. It may be constituted to secure not only an actual claim, but also a future or a
conditional claim.

The mortgage, which is governed by articles 1257 and following of the Civil Code,
is one of the most important securities which can be provided by the debtor
because, on the one hand, the value of the immovables rarely decreases (usually it
increases and it is not excluded that it increases considerably especially at
present, at least as far as Greece is concerned) and, on the other hand, because of
the “follow up” right, which has as a result that, even if the immovable
encumbered with the mortgage is sold, it continues to constitute a real security for
the creditor since the mortgage is not affected by the transfer of the ownership of
the immovable to a third party.

Any immovable susceptible to be alienated can be burdened with a mortgage. The usufruct
of immovables, which are susceptible to be alienated, can also be burdened with a
mortgage.

The immovables belonging to the public domain (monuments etc.), those which are
intended to public use (parks, public squares etc…), the plots of land which are considered
as forests, the plots of land the soil or the subsoil of which contains archeological objects
etc. cannot be alienated. Consequently, no mortgage can be constituted on them.

2.2. In order to acquire a right of mortgage on an immovable, a relevant title is needed, as
well as its inscription in the Mortgages Register. The mortgage is constituted as of the day
of the transcription of the relevant deed in the Mortgages Register kept at the Mortgages
Registry, which is the same as the Land Registry, the duties of Land Registrar and those of
Mortgages Registrar being in fact exercised by the same person.

2.2.1. The titles giving right to acquire a mortgage on one or more immovables belonging
to another are the following :

a. The Law.

b. A Court decision.

c. The will of private physical persons or legal entities.

d. To the extent they order payment of a sum of money or they adjudicate a claim, which
can be estimated in money, the final judgments of the Civil, Criminal, Administrative and
other Courts, as well as the enforceable awards of arbitrators and the enforceable
judgments of foreign Courts confer title for the acquisition of a mortgage.

The order of payment of a sum of money, which is rendered by the Judge of the competent
Court of First Instance following an application of the creditor according to the quick
procedure provided for by articles 623 and following of the Code of Civil Procedure,
constitutes a title for the acquisition of a mortgage in case the order of payment is no more
susceptible of appeal, either because the period of time within which an appeal could be
filed has elapsed or because the appeal filed by the debtor was rejected by means of a final
judgment.

2.2.2. The following have, by virtue of the Law, the right to acquire a mortgage :

- the Public Treasury on the immovables of its debtors for claims relating to unpaid taxes.

- the Public Treasury, the Municipalities, the Communities, the Religious or Public Utility
Foundations, as well as the legal entities governed by Public Law, on the immovables of
their administrators or of the guarantors thereof, regarding claims arising out of the
management of their assets.

- The persons placed under parental authority or under tutelage, on the immovables of their
parents or their tutor, regarding the patrimonium managed by them, as well as for any
claim arising out of such management.

- each one of the spouses regarding his claims related to the increase of the patrimony of
the other spouse during the marriage.

- the legatees on the immovables of the estate of the deceased, regarding their claims.

- The heirs on the immovables on the estate of the deceased regarding their claims.

- The mortgagees on the immovable burdened by the mortgage in respect of overdue
interests on the amount of their secured claim, in respect of the expenses relating to the
inscription of the mortgage or in respect of the legal costs as long as the immovable has not
been transferred to a third party.

2.2.3. The right to register a mortgage by virtue of a title conferred by the Law or by virtue
of a Court judgment extends to all the immovables of the debtor subject to any different
provision of the Law. This does not mean that the mortgage can be registered in a general
way on all the immovables of the debtor, but that the creditor has the right to select the
immovable(s) which he considers the most appropriate to secure his claim.

The right for inscription of a mortgage can be granted voluntarily to the creditor either by
the debtor himself, on one or more immovables belonging to him or by a third party in
favour of the debtor on one or more immovables belonging to the third party.

2.3. In principle, the right to register a mortgage, when it is voluntarily granted by the
debtor or by a third party in favour of the debtor, requires a unilateral declaration be done
before a Notary, in which the immovable to be encumbered with the mortgage must be
described in a very detailed way. Likewise, the claim, which is guaranteed by means of the
mortgage, must be defined in a precise way in the frame of the same notarial deed, which
has to be thereafter registered in the appropriate Register of the Land Registry, in the
territorial area of which the immovable is located.

The mortgage being an accessory right, it assumes the existence of a claim the collection of
which shall be guaranteed by it. The legal cause having generated the claim is not of
essence as long as the debtor acknowledges that it exists and he is prepared to grant to the
creditor a real security to warrant the collection of his claim. Usually, the right for inscription
of a mortgage is granted to the creditor at the same time when the claim is generated, even
if it is not immediately exigible.

2.3.1. We will give herebelow practical examples which, to our opinion, are the most
characteristic cases of claims secured by a mortgage granted voluntarily by the debtor.

a. We will first take the example of the sale of an immovable where the sale price is not
paid entirely by the buyer upon execution of the notarial deed pertaining to the sale. In
order to safeguard the claim regarding the amount (or a portion thereof) of the price, for
which the vendor has granted a credit to the buyer, the vendor shall request guarantees
such as, for instance, the acceptance by the buyer of one or more bills of exchange
(depending on whether the balance of the price must be paid in one or more instalments),
the date(s) of maturity of which shall coïncide with the date(s) on which the instalment(s)
become due. Instead of bills of exchange, the vendor may ask the buyer to issue post dated
cheque(s) to his (the vendor) order. The dates of the cheque(s) should coïncide with the
date(s) on which the entire portion of the price, for which the vendor has granted a credit to
the buyer or the instalments thereof become due. Cheques provide to the vendor a more
solid warranty than bills of exchange in the sense that the fact to issue a cheque, which is
not covered, that is not covered constitutes in Greece a criminal act pursued following a
complaint of the victim. This make on the buyer a stronger pressure than the non payment
of bills of exchange or promissory notes, which does not constitute a criminal act.

In any case, the vendor – if he is prudent – shall ask the buyer to grant him the right for
inscription of a mortgage on the immovable, which is sold. The buyer shall usually grant
such a right since he knows that if he refuses the vendor shall not proceed to the sale of the
immovable. But the vendor will very possibly not proceed immediately to the inscription of
the mortgage, since this would attract considerable expenses. Often, an intermediary
solution is found consisting of the inscription of a mortgage for a small part only of the
amount of the sale price remaining due by the buyer and of the inscription for the
remainder of a provisional mortgage (prenotice of mortgage) – which will be examined in
extenso herebelow – the registration of which attracts expenses by far lower than those
attracted by the registration of a mortgage.

The rank of the mortgage, which will be granted by the buyer to the vendor, is a crucial
issue. In case the buyer does not intend to obtain a loan from a Bank, the mortgage which
he will be prepared to grant to the vendor will be a first rank mortgage. But if the buyer
intends to obtain a loan from a Bank, he shall have to keep the right to register a first rank
mortgage for the Bank, otherwise he will not be able to get the loan, unless he has other
satisfactory guarantees to offer to the lender Bank.

In case he wants to keep the first rank for the mortgage, which he will grant to the Bank,
the buyer shall offer to the vendor only a second rank mortgage. The acceptance or not by
the vendor of such a mortgage is a practical aspect of the question and depends on the
circumstances of each specific case. Yet, it can be stated that the vendor will usually accept
to give priority to the Bank, which will grant a loan to the buyer, since the amount of said
loan shall be used to pay the sale price or the part thereof remaining due, all the more that
most of the times the lender (buyer) agrees that the amount of the loan be paid directly by
the Bank to the seller, in which case the claim is settled directly and therefore the
inscription of a mortgage by the vendor becomes useless. To be noted that the practice of
the Banks at present is to make of the payment of the amount of the loan directly to the
vendor a condition sine qua non of the granting of the loan, which the lender has to accept
otherwise he shall not get the loan.

As already exposed, the deed pertaining to the sale of an immovable must be in the form of
a notarial deed. Consequently, the right to register a mortgage can be granted by the buyer
to the vendor in the frame of the notarial deed pertaining to the sale of the immovable. That
is to say that, in the case of the above example, the unilateral act, by virtue of which the
debtor grants to the creditor the right for inscription of a mortgage, is contained in the
notarial deed pertaining to the sale of the immovable. Thus, although the immovable does
not belong yet to the buyer since its title of property will be transferred to the buyer only
upon the transcription of the notarial deed in question in the corresponding Register of the
competent Land Registry, the buyer validly grants to the seller, who – formally speaking –
continues to be the owner of the immovable, the right to register a mortgage on the
immovable, which is sold. This constitutes a kind of exception to the rule according to which
the person granting the right to register a mortgage on an immovable must be the
proprietor thereof.

Actually, in the above example, the buyer, although he is not yet the proprietor of the
immovable, grants the right to register a mortgage on it. But such a right may be granted
only to the vendor, who is still the proprietor of the immovable. This is why it is not a real
exception to the above mentioned rule, which prohibits the granting of a right for inscription
of a mortgage on an immovable belonging to a third party without his consent since the
consent of the owner, i.e. of the seller is granted.

2.3.2. The second example concerns the mortgage which is granted in order to guarantee a
claim deriving out of a loan agreement. It is not necessary for a loan agreement to be in the
form of a notarial deed regardless to whether it is granted by a Bank or by a private person.
On the contrary, when the right for inscription of a mortgage is voluntarily) granted, the
mortgage can be constituted only by virtue of a notarial deed, which has to be registered in
the Register of Mortgages as already exposed above. If the parties wish for any reason to
combine the agreement pertaining to the loan with the act pertaining to the granting of the
right for inscription of a mortgage, i.e. in case the parties want that the loan and the
mortgage be the object of one and the same act, a notarial deed has to be executed in this
respect having as object both the granting of the loan and the granting of the right to
register a mortgage in order to guarantee the refunding of the amount.

The above formula is very expensive since the expenses of the notarial deed amount, in
such a case, to ± eight per cent (± 8%) (including the stamp duty referred to below) of the
amount, of the loan to be secured by the mortgage.

Therefore, the lender, regardless to whether it is a Bank or a private person, usually selects
to sign a private loan agreement, regarding which a stamp duty of three and 0,6 per cent
(3,6%) in case both the lender and the borrower are private persons and of two and 0,4 per
cent (2,4%) in case one of the parties is a commercial enterprise and the loan is connected
to its activities (such as in case of a bank loan) shall have to be paid to the Public Treasury.
This will be the only duty to be paid in case the loan is concluded by means of a private loan
agreement, which the expenses for the inscription of the mortgage amounting to ± 0,8% of
the amount of the loan secured by the mortgage shall be added. On the contrary, if the loan
agreement is in the form of a notarial deed, there will be other duties to be paid to the
Jurists’ Pension Fund etc.., The legal fees of the Notary Public, which are calculated by
application of a percentage on the amount of the loan (or any other amount being the value
of the object of the notarial deed) will have also to be paid. To these duties, a duty of ± 0,8
% has to be added regarding the inscription of the mortgage. Thus, the total expenses
would reach ± eight per cent (± 8%) in case of a loan agreement in the form of a notarial
deed including the right to register a mortgage.

In order to dissuade as less as possible their clientèle from getting loans, the practice of the
Banks has elaborated a formula which allows to reduce the expenses. According to said
formula, the loan agreement is in the form of a private agreement. By virtue of a notarial
deed, the borrower grants to the Bank the right for inscription of a first rank mortgage for
an amount which is often ridiculous, just for the Bank to secure the first rank for itself. As to
the remainder of the amount of the loan, the borrower (or the third party if the immovable
does not belong to the lender) grants to the Bank the right for inscription of a prenotice of
mortgage on the immovable.

Let us assume that, at some stage, another creditor of the lender fulfils the conditions to
activate a procedure of compulsory enforcement of an enforceable title upon the assets of
the lender. The claim of the Bank, which is guaranteed by means of a first rank mortgage,
shall be satisfied by priority. Yet, in the above example, said claim will be of a small
amount. In order to collect by priority also the amount guaranteed by virtue of the
prenotice of mortgage, the Bank should convert it into a mortgage, which assumes the
obtaining of an enforceable title. A private loan agreement being not an enforceable title,
the Bank should instigate legal proceedings in order to obtain, for instance, an order of
payment against the borrower. Such an order of payment can be obtained very quickly. But,
in case the borrower files an appeal against it, the conversion will be feasible only if and
when the appeal is rejected by means of a final judgment. Most of the times this will take a
rather long time. If in the meantime the immovable is sold in public auction in the frame of
the procedure of compulsory enforcement instigated as above by another creditor of the
borrower, the Notary conducting the sale by public auction will distribute the proceeds of
the sale to the various creditors fulfilling the conditions to participate to the distribution
according to the relevant legal dispositions, which will be referred to below. As far as the
creditors whose claims are secured by means of a prenotice – among which the Bank in the
above example, for the most important part of its claim – the Notary shall deposit the
relevant amounts, to which said creditors would be entitled if they had obtained an
enforceable title and converted the prenotice into a mortgage, with the Consignations and
Loans Funds until the creditors in question are able to proceed to the above conversion.

It is interesting to note that the Banks have found a way to overcome the obligation to wait
until their prenotice is converted into a mortgage in order to collect the remainder of their
claim : based on an old Legislative Decree no 4001/1959 and, more precisely on its article
6, they use to submit to the Notary a letter of guarantee issued by themselves, against
which they are allowed to collect immediately their claim out of the proceeds of the sale by
public auction. Thus, if the prenotice of the Bank has been registered immediately after its
own mortgage which, in the above example, secures only a small amount of the Bank’s
claim, the remainder, which is secured by the prenotice shall be satisfied by priority as well,
i.e. before other claims for which a second, third etc.. mortgage has been registered. Often,
the Bank “forgets” the matter and never proceeds to the conversion of the prenotice into a
mortgage, since it has already received the entire amount of its claim after having handed
to the Notary a letter of guarantee as above and there is not any reason for it to incur
additional expenses for the conversion of the prenotice into a mortgage. It goes without
saying that this “formula” could in any case be applied only by Banks, for which the issue
and the keeping valid of a letter of guarantee does not entail any expenses, while for any
other person the relevant expenses would be prohibitive, on the assumption that anyone
would be allowed to apply said «formula», which is not the case, since article 6 of L.D. no
4001/1959 applies only to Institutions Financing the Economic Development and to Banks.

2.3.4. In case the immovable, which will be encumbered with the mortgage, belongs to a
third party and not to the borrower, the third party also must sign the loan agreement as a
party participating to the contract in the capacity of guarantor in fact, since it is his
immovable which guarantees the refunding of the loan.

In case of a private loan agreement, the lender will take care to include in it a clause by
application of which the amount of the loan will be paid to the borrower only when the
unilateral act granting to the lender the right to register a mortgage on the immovable
(regardless to whether it belongs to the borrower or to a third party) will be signed before a
Notary Public. An official copy of the unilateral act in question – which is signed either by
the borrower or by the third party in case the immovable to be encumbered by the
mortgage belongs to a third party - will be handed to the lender, who will take steps in
order to register the mortgage in the Registers of Mortgages of the competent Land
Registry.

2.3.5. The inscription of a prenotice of mortgage can be done only by virtue of a judgment
rendered in this respect by the competent Court.

The prenotice confers solely a right of preference for obtaining a mortgage. As soon as the
claim is adjudicated by a final judgment, the prenotice can be converted into a mortgage,
which is deemed to have been registered as from the date of the registration of the
prenotice.

The conversion of the prenotice into a mortgage is not prevented by the transfer of the
immovable to a third party.

As a matter of fact, the registration of a prenotice of mortgage is a kind of conservative
measure ordered by the Court following a relevant application of a person having a legal
interest to that. Yet, it is frequent that the debtor agrees or voluntarily offers to the creditor
to register a prenotice of mortgage upon one or several immovables belonging to him. But
even then, i.e. even when the debtor and the creditor are in agreement regarding the
registration of a prenotice of mortgage, it is mandatory that said registration be ordered by
means of a judgment rendered to this end by the competent Court.

When the debtor agrees to the registration of a prenotice, the situation has – practically
speaking – as follows : the creditor files an application with the One Member Court of First
Instance in the territorial area of which either the immovable or the domicile of the debtor is
located. Simultaneously with the filing of the application, he presents himself to the Judge,
together with the debtor, who declares to the Judge that he agrees to the inscription of the
requested prenotice of mortgage. The Judge renders then a judgment ordering the
registration of a prenotice of mortgage on one or more immovables belonging to the debtor,
which must be described in detail in the application and in the relevant judgment.

The inscription of a prenotice of mortgage must be done in the Registers of Mortgages of
the Land Registry in the area of which the immovable, which will be encumbered, is located.

2.3.6. In case a compulsory attachment has been imposed on the immovable before the
conversion of the prenotice into a mortgage, the claim for the benefit of which the prenotice
was registered shall not rank effectively, but the Notary shall deposit the relevant amount
with the Consignations and Loans Fund and the immovable shall be transferred free from
any burdens to the acquirer as soon as he pays the adjudication price.

In case a compulsory attachment has been imposed on the immovable after the prenotice is
converted into a mortgage, the claim secured by it becomes a privileged one in the same
way as it would have been in case a mortgage had been registered as of the beginning,
without previous registration of a prenotice.

The prenotice of mortgage can be registered on one or more immovables belonging to a
third party provided obviously that the third party agrees to such registration.

The prescription is interrupted in case of registration of both a mortgage and a prenotice of
mortgage as far as the claim secured by them is concerned. In case the mortgage or the
prenotice of mortgage are striked out, the prescription is deemed to have never been
interrupted.

2.4. A person having knowingly granted the right for inscription of a mortgage on an
immovable belonging to a third party or having concealed from the creditor the limitations
and the encumbrances burdening the ownership of the immovable is bound to pay forthwith
the debt if he is not in a position to grant lawfully another mortgage securing the debt in the
same way as the precedent one. In case the behaviour of the person having granted the
first mortgage on an immovable, which does not belong to him, has provoked damages to
other persons, he is liable to indemnification.

The inscription of a mortgage on an immovable on which the person conferring the
mortgage has not ownership at the time of the registration is null. It may not be validated
by a subsequent ratification by application of the principle that the nullity cannot be
remedied and that the relevant act must be repeated. Even the subsequent acquisition of
the immovable by the person having granted the right for inscription of a mortgage does
not validated the registration done before the acquisition of ownership of the immovable. In
case a new inscription of the mortgage is done after the person granting the right for
inscription of a mortgage acquires title of property on the immovable, the mortgage is
considered to have been done as of the date of the second registration.

The inscription of a mortgage is always       done for a specific amount of money. In case the
title by virtue of which it is proceeded to   the inscription of the mortgage does not mention a
specific amount, the person requesting        the registration has to fix an amount even in an
approximate way. However, the debtor          is entitled to demand an appropriate reduction of
said amount.

A mortgage registered by virtue of the Law or by virtue of a Court judgment on several
immovables of the debtor may, at the debtor’s request, be limited only to those immovables
the value of which provides sufficient security for the claim.
2.5. The priority rank of the mortgages is determined based on the chronological order of
their registration.

All the mortgages registered the same day have the same rank and the mortgagees shall be
satisfied pro rata. Two or more creditors having registered mortgages or prenotices on the
same immovable but on different dates may interchange the rank of their mortgages by
means of a notarial deed. A relevant entry is done in the Register of Mortgages next to the
corresponding registration.

2.6. A mortgage extends to the whole of the mortgaged immovable, as well as to the
components and accessories thereof.

In case a movable being a component or an accessory of the mortgaged immovable has
been separated from the immovable and transferred to a third party, the mortgagee
(creditor) is not entitled to claim back the movable from such third party.

When the mortgaged immovable runs the risk of deterioration or reduction of its value due
to a fault imputable to the debtor, the creditor shall be entitled to demand the
discontinuation or the lifting of the harmful acts or the immediate settlement of the debt or
the granting of another similar mortgage. A claim for damages according to the provisions
governing illicit acts (articles 914 and following of the Civil Code) shall not be excluded.

When the mortgaged immovable is a building, the mortgagee shall be entitled to ensure it
against fire or other risks at the debtor’s expenses. In case the debtor does not pay the
relevant premiums, the creditor is entitled to demand immediate payment of the debt.

In case the mortgaged immovable is ensured, the right of mortgage may also be exercised
on the insurance indemnity. The creditor has the obligation to deposit the relevant amount
with a Public Institution in the framework of the procedure regarding the establishment of
the order of priority of the creditors. However in case the mortgaged immovable is a
building, the debtor is entitled – within six (6) months as of the day on which the risk has
occurred – to demand that the insurance indemnity be used for the restoration of the
building. If, within one (1) year as of the payment of the insurance indemnity, such
restoration has not taken place, the money shall be deposited with a Public Institution in
view of the procedure regarding the establishment of the order of priority of the creditors.

In case of compulsory expropriation of the mortgaged immovable, the right of mortgage
shall be exercised on the indemnity paid to the proprietor. The relevant amount must be
deposited with a Public Institution in the framework of the procedure regarding the
establishment of the order of priority of the creditors, to which we shall revert below.

In case the principal amount of the claim secured by the mortgage has been registered as
bearing interest, the mortgage secures on the same rank of priority – regardless to who is
the proprietor of the immovable – the overdue interest of one (1) year before any
attachment of the immovable, whoever the creditor activating the compulsory attachment
procedure is, as well as interests having become due subsequently to the attachment until
payment of the debt or until the list setting forth the order of priority of the creditors has
become final.

2.7. The registration of a mortgage does not deprive the owner of the immovable from the
right to grant other mortgages on the same immovable, in favour duly registered in the
Mortgages Register - be opposed to third parties who have acquired a mortgage based on a
declaration of private will. On the contrary, such an agreement cannot be opposed to any
third party having registered a mortgage based on the Law or by virtue of a Court
judgment.

2.8. The creditor is entitled to demand from the debtor to pay the debt instigating
– at his discretion – either a legal action based on the act having generated the
debt or the legal action deriving out of the mortgage. The filing of the legal action
deriving out of the act having generated the claim does not exclude the exercise of
the action deriving out of the mortgage and vice versa.

The debtor may seek collection of the amount of his claim by instigating the legal action
deriving out of the mortgage, through compulsory sale of the mortgaged immovable, as
soon as the debt becomes due. When the debt becomes due, the mortgagee may then
proceed, but only based on an enforceable title. If the act having generated the secured
claim is in the form of a notarial deed, same will almost always have been declared
enforceable by common agreement of the parties as of the beginning, the enforceability
applying obviously only when the debt becomes due. If there is no notarial deed, the
mortgagee will have to obtain a Court judgment based on any act he has, which has
generated or which proves the existence of the exigible debt (private agreement, cheque,
bill of exchange, recognition of debt etc..). Once the relevant judgment becomes final or in
case the judgment rendered at the first degree is declared provisionally enforceable, the
mortgagee may impose a compulsory attachment on the mortgaged immovable, in order for
it to be sold in public auction, according to what will be exposed more in detail herebelow.
To be noted that the mortgagee can never be satisfied by acquisition of the title of
property of the mortgaged immovable automatically. The immovable must be sold
in public auction. The mortgagee may file an offer for its acquisition. In case the
immovable is adjudicated to him, the amount of his claim may be deducted from
the adjudication price.

The mortgagee may select to file the law – suit deriving out of the act having generated the
claim. When he obtains a final judgment or a judgment which has been declared
provisionally enforceable by the Court, he may proceed to the enforcement thereof by
attaching any assets of the debtor, i.e. any movables and / or immovables belonging to the
debtor and not only on the immovable encumbered by the mortgage.

In the light of the above, the mortgagee has, in both cases, to obtain an enforceable title.
Thereafter, he may proceed to the compulsory enforcement thereof by attaching any assets,
either movables or immovables belonging to the debtor. In case the compulsory
enforcement is done by means of attachment of the immovable encumbered by the
mortgage, the mortgagee shall be satisfied by priority in the way described below,
regardless to whether the immovable belongs to his debtor or to a third party. In case the
compulsory enforcement is done by means of attachment of any other assets of the debtor
(either movables or immovables) the mortgagee shall be treated as an unsecured creditor.

As a matter of fact, both the legal action deriving out of the act having generated
the claim and the legal action deriving out of the mortgage have the same results
for the mortgagee. The only difference is that the action deriving out of the
mortgage allows the mortgagee to attach the immovable encumbered by the
mortgage even if it belongs to a third party, which cannot be done if the
mortgagee exercises the legal action deriving out of the act having generated the
claim.

Further, based on the action deriving out of the mortgage, the mortgagee may participate
to the procedure of sale by public auction of the mortgaged immovable even if same
belongs to a third party and the procedure of its sale by public auction is activated by a
creditor of his. The mortgagee, who – in such a case – is a creditor of another person – may
announce his claim against the other person to the Notary conducting the procedure of the
sale by public auction of the immovable encumbered with the mortgage, in order to be
satisfied by priority (based, of course, on its rank) although he is not a creditor of the
proprietor whose immovable is sold in public auction.

The mortgagee, whose claim has not been satisfied in whole or in part through the proceeds
of the sale by public auction of the mortgaged immovable, is entitled to commence a
personal legal action against any one being under an obligation to pay.

A third party proprietor of the mortgaged immovable, as well as a third party possessing the
mortgaged immovable based on a legal title can be sued by the creditor who, by lodging the
real action deriving out of the mortgage, is entitled to seek collection of his claim by means
of a compulsory enforcement on the mortgaged immovable. The third party, who is the
proprietor and has granted the mortgage on the immovable, may avoid that the immovable
be sold in public auction if he pays the claim(s) secured by the mortgage.

According to paragraph 1 of article 1008 of the Greek Code of Civil Procedure, in case the
creditor agrees, the adjudicator (buyer) may accept the debt, being guaranteed by the
mortgage encumbering the immovable, which is sold by public auction. In such a case, the
buyer may be exonerated from payment of part of the adjudication price, which corresponds
to the debt secured by means of the mortgage.

The enforcement against the third proprietor or possessor of the mortgaged immovable is
pursued according to the relevant dispositions of the Code of Civil Procedure. In case, after
payment of the privileged creditors, the mortgagees and the unsecured creditors (which are
paid pro rata) there is any balance remaining out of the proceeds of the sale by auction, the
relevant amount is remitted to the third party.

The third party, either proprietor or possessor of the mortgaged immovable, is liable only up
to the value of the mortgaged immovable, unless he has undertaken personally vis – à – vis
the creditor the obligation to refund entire amount of the debt secured by the mortgage.

2.9. In case the mortgage secures a personal guarantee, the third party being the
proprietor or the possessor of the mortgaged immovable is entitled to demand that the
principal debtor be sued first, unless the guarantor has waived the right to raise the plea of
discussion provided for by article 855 of the Civil Code.

In case the third proprietor or possessor of the mortgaged immovable pays the debt, which
is secured by the mortgage or in case he has been evicted from the immovable as a result
of its sale by public auction, such third party shall be subrogated to the rights of the
mortgagee.

The priority between the mortgagees is determined based on the chronological order of
inscription of their mortgages.

The creditors whose mortgages have been registered on the same day shall be satisfied pro
rata.

Any one may apply for the inscription of a mortgage based on an act granting the right for
inscription of a mortgage to his benefit or to the benefit of a third party.

The application seeking the registration of a mortgage to the benefit of a third party can be
filed mainly by : (a) the creditor(s) of the creditor in case the creditor (who is a debtor or
the applying creditor(s)) has neglected to register the mortgage to his benefit and (b) by
the guarantor(s) in case the creditor has neglected to proceed to the inscription of a
mortgage he is entitled to register in order to secure his claim against the principal debtor,
(c) the tutor, the surrogate tutor or any relative for the benefit of a person placed under
tutelage, on the immovables of the tutor.

Any agreement between spouses about non inscription of a mortgage for the benefit of the
other in order to secure his potential claims deriving out of the increase of the patrimony of
the other spouse is null and void.

2.10. The person applying for the inscription of a mortgage must submit to the competent
Land Registry the title by virtue of which the mortgage will be registered, as well as two
summaries thereof.

The above summary must include the name, the surname, the domicile and the profession
of the creditor and of the debtor, the date and the nature of the title, the amount
guaranteed by the mortgage, the date on which the debt will become due, as well as the
description of the immovable with indications as to its kind, its location and its boundaries.

The mortgagee has the obligation to notify to the debtor – unless the debtor has cooperated
to the registration – a copy of said summary within eight (8) days as of the inscription
registration of the mortgage.

A mortgage can be registered on immovables belonging to a deceased person, without any
mention concerning his heirs.

2.10. By applications of paragraphs 1, 3 and 4 of article 997 of the Code of Civil Procedure,
the sale by the debtor of an attached immovable(s) is prohibited and it is null and void as
far as the creditor at the request of whom the immovable(s) have been attached and the
creditors having declared their claims are concerned. The above applies also to a mortgaged
immovable regardless to whether it belongs to the debtor or to a third party, i.e. the sale of
the immovable is null and void if it takes place after the immovable has been attached
either by a mortgagee or by any other creditor, in order for it to be sold in public auction.
The above prohibition applies also to the possessor of the mortgaged immovable.

The inscription of a mortgage, which takes place after the registration of the attachment of
the immovable in the Register of Attachments, has no effect as far as the creditor at the
request of whom the immovable was attached and the creditors who have declared their
claims are concerned regardless to whether they are mortgagees or unsecured creditors and
regardless to the nature of the title by virtue of which the inscription of the mortgage was
done.

The conversion of the prenotice into a mortgage, which is done after the registration of the
attachment, can be opposed to the creditor at the request of whom the attachment was
imposed and also to the creditors who have announced their claims, provided the
registration of the prenotice has been done before the registration of the attachment.

In case it occurs that the registration of a compulsory or a conservative attachment and the
registration of a mortgage regarding the same immovable are done on the same day,
priority is granted to the act which has been registered first, even if the difference of time is
minimal.

The same applies in case a transcription of a deed etc… whereby a real right on an
immovable is constituted, transferred or abolished occur on same day.

In case of assignment or pledge of a claim secured by a mortgage, the assignment or the
pledge has to be noted in the relevant column of the Register of Mortgages at the initiative
of the assignee or of the pledgee (creditor), who shall both be liable for any damages
possibly caused by any omission of them in this respect.

In case of a compulsory expropriation of the mortgaged immovable, the right of mortgage
(actually the right to be satisfied by priority) shall be exercised on the indemnity paid to the
expropriate proprietor. The indemnity in question shall be deposited with a Public
Institution. Thereafter, the procedure regarding the establishment of the order of priority of
the creditors shall be followed.

2.11. The reduction of the amount secured by means of the mortgage or the lifting of the
mortgage from part of the mortgaged immovable(s), as well as the modification of the
terms and conditions of the debt can be registered only pursuant to a Court judgment or
with the consent of the parties provided it is incorporated in a notarial deed.

Errors and omissions regarding the inscription, which are imputable to a fault of the parties,
can be corrected only on the basis of such documents as are required for the initial
inscription.

The corrections are valid as of the day on which they are done.

Unless it is otherwise agreed, the expenses related to the inscription of a mortgage are born
by the debtor, but they are prepaid by the person who files the application regarding the
inscription. The same applies as far as the expenses related to the registration of a
prenotice are concerned and also those regarding its conversion into a mortgage.

2.12. The mortgage is extinguished simultaneously with the extinction of the secured claim
regardless to the reason for which the claim was extinguished.

The mortgage is also extinguished in case of total disappearance of the mortgaged
immovable, by a renunciation of the creditor done by means of a unilateral declaration
before a Notary, by the sale in public auction of the mortgaged immovable and the payment
of the proceeds of the sale by the adjudicator and by the expiration of the period for which
the mortgage was granted. Needless to say that, in case of free sale of the immovable, the
mortgage is not extinguished, It continues to burden the immovable in spite of the change
of the proprietor. This is precisely the characteristic of the mortgage, which makes of it a
solid security, i.e. that it follows the immovable even if the debtor or the third party (in case
the right to register a mortgage was granted to the creditor by a third party) proceeds to
the sale of the immovable.

The renunciation of the creditor regarding the mortgage does not abolish the right of the
creditor to loge the action deriving out of the act having generated the claim, which is
secured by means of the mortgage. Said action may be directed against any person who is
liable for payment of the amount of such claim (debtor, guarantor etc..).

The mortgage is also extinguished in case of extinction of the claim secured by it and also in
case the creditor in favour of whom the mortgage has been registered becomes the owner
of the immovable encumbered by the mortgage.

The prenotice of mortgage is extinguished for the same reasons as the mortgage and, in
addition, following revocation of the judgment, which has allowed its inscription. It is also
extinguished if it has not been converted into a mortgage within ninety (90) days as of the
date on which the judgment, which allocates the claim secured by the prenotice of
mortgage becomes final.

2.13. Mortgages can be striked out of the Mortgages Registers either with the consent of
the creditor or by virtue of a final judgment.

When a mortgage is extinguished, it cannot revive. In case it is registered anew, it is valid
only as of the date of the new inscription.

The consent of the creditor for the lifting is granted unilaterally before a Notary.

In case the creditor does not consent to the lifting, any person having a legal interest to this
end may introduce a relevant action before the competent Court seeking that the lifting be
ordered.

The Court orders the strike out of the mortgage in case the mortgage has been extinguished
or in case its inscription is null and void.

The inscription of a mortgage is null and void in case an uncertainty accrues out of it
regarding the identity of the creditor or of the debtor or of the immovable encumbered by
the mortgage or regarding the amount of the claim secured by it, in case the registration is
not dated and in case it has been done by virtue of a title which is null and void.

The prenotice of mortgage is striked out either following consent of the debtor granted by
virtue of a notarial deed or following a judgment revoking the one which has authorized its
inscription or ordering its strike out or if ninety (90) days have elapsed as of the date on
which the claim has been allocated definitively to the concerned creditor and the prenotice
of mortgage has not been converted into a mortgage.

The strike out of a mortgage and of a prenotice is done at the request of any person proving
that he has a legal interest to this end.
When a mortgage is striked out, its rank is taken by the mortgage following it.

The strike out of the mortgage from the relevant Registers, as well as of a prenotice of
mortgage, is recorded in the Mortgages Register next to the registration of the mortgage or
of the prenotice of mortgage, respectively.

2.13. The documents issued by a Land Registry are public acts in case they fulfill the
conditions of the Law. The same applies to the copies extracted from the Registers of
Mortgages. The Registers of Mortgages are numbered on each one of their pages and
initialed by the President of the competent Court of First Instance before any registration.
The number of pages is certified at the end of each Register.

All the quantities mentioned in the Registers of Mortgages are written both in numbers and
in letters.

The Mortgages Registar (Land Registar) must sign by his own hand any inscriptions and
cancellations. He must also gather in separate Volumes the summaries, as well as any other
documents required for the inscription of the mortgages or the cancellation thereof.

The Registrar must indemnify any person who has been harmed by any act or omission of
his committed during the exercise of his duties.

2.14. In case of assignment of a claim secured by means of a mortgage, the mortgage is
also assigned, together with the secured claim.

The assignee acquires rights vis – à – vis the debtor and any third parties (for instance, the
proprietor of the immovable, when the mortgaged immovable does not belong to the debtor
but to a third party) only as of the notification of the assignment to the debtor by the
assignor or by the assignee.

In case of sale of an immovable encumbered with a mortgage, if the vendor and the buyer
agree that the debt of the vendor, which is guaranteed by a mortgage, will be paid by the
buyer, the buyer is subrogated to the vendor in respect to the debt. The vendor is
discharged if the creditor does not refuse in writing the change of the debtor within six (6)
months as of the day on which the changement is notified to him in writing. Said notification
is done after the transcription of the notarial deed pertaining to the sale of the immovable.
It can be done exclusively by the vendor and the creditor must send his answer to the
vendor. The vendor must bring the answer with no delay to the knowledge of the buyer the
answer of the creditor.

2.15. It accrues out of the above that the mortgage is an efficient real security and that if it
is registered on an immovable the value of which is substantially higher than the amount of
the claim and the relevant interests then, even if the price obtained through the sale by
public auction (adjudication price) is lower compared to the market value of the immovable,
the lender will nevertheless be able to collect the amount due to him.

The creditor will be able to proceed to the activation of the mortgage only based on an
enforceable title, which will allow him to make so that it be proceeded to the sale by public
auction of the immovable encumbered with the mortgage in order to obtain reimbursement
of his claim through the adjudication price. In case the legal act, which has generated the
claim is a notarial deed, the parties will most probably have agreed – since this is, in
general, an imperative request of the creditor – that the act be declared enforceable being
understood that it could be proceeded to the compulsory enforcement by virtue of said act
only when the debt deriving out of it becomes exigible. This will not be the case if the act
having generated the claim, which is secured by the mortgage, is a private document, in
which case the creditor will have to obtain a definitive judgment allocating to him his claim
before he is able to proceed to the enforcement, according to what has been exposed in
detail hereinabove.

3. It is worthwhile to examine other formulas which can be applied so as an immovable
warranties the payment of a claim. Said formulas can be used mainly in the cases of
transfer of the ownership of an immovable based on an onerous contract where the person
acquiring it the immovable cannot fulfil immediately his obligations to pay the consideration
price and the vendor has granted him a credit of time in this respect.

We shall again take the example of the sale of an immovable where the vendor gives credit
to the buyer regarding the payment of the entire amount of the price or of part of it.
Besides the mortgage, the vendor has at his disposition the following means to
secure the collection of the amount remaining due to him :

a. the retention of the title of property by application of article 532 of the Civil
Code, which provides that, if it has been stipulated that the vendor will keep the
title of ownership until the price is fully paid, the title of property is transferred to
the buyer only after he will have paid the entire amount of the agreed price. In
fact, this is a suspensive clause regarding the transfer of the title of property.

b. the agreement for repurchase (sale with a right of redemption) as per article
565 of the Civil Code, which provides that, by virtue of an agreement for
repurchase, the vendor shall be entitled to take back the thing sold in
consideration of an agreed price, within a fixed period of time. In fact, the price of
the repurchase, which will be agreed, will be equal to the amount of the claim of
the vendor, in capital, plus interest and expenses.

The period of time within which the repurchase can take place is of five (5) years,
even if the parties have not agreed expressly the duration of their relevant
agreement or in case the agreed duration exceeds five (5) years. The parties may,
of course, fix a shorter duration.

The repurchase is done by virtue of a declaration of the vendor to the purchaser advising
him about his decision to exercise his right to repurchase the thing. The declaration of
repurchase is done in the same form as the form in which the contract of sale must be done
according to the Law (notarial deed in case of an immovable).

When the repurchase is achieved, the buyer must give back the thing with its accessories,
exonerated of any charges with which it has possibly encumbered it before the repurchase,
while, from his side, the vendor must reimburse the price to the buyer.

It accrues out of the above that, in case of a repurchase agreement, the lender – buyer
shall keep definitively the immovable in case the borrower – vendor is not in a position to
exercise his repurchase right.

More precisely, in case the borrower cannot offer any other guarantee or in case the lender
does not accept any other guarantees possibly offered by the borrower, the borrower could
possibly – if he has not any other solution - sell an immovable belonging to him to the
lender and include in the sale contract an agreement for repurchase (right of redemption),
according to which the borrower (seller) would have the right to repurchase the immovable
within a period of time equal to the duration of the loan, (provided same does not exceed
five (5) years) against a fixed price, which would be equal to the amount of the loan, plus
interests and expenses. Although the formula under discussion seems prima facie to offer to
the lender full security, in fact it is not so. Actually, besides the fact that such a formula
could be applied only in case the duration of the loan does not exceed five (5) years, the
borrower – seller – could - even if he does not refund the loan, the interest due and the
related expenses - prevent the lender from keeping the title of property of the immovable,
not through enforcement of the repurchase agreement, but by obtaining the cancellation of
the act of sale claiming that its causa is the fiduciary transfer of the title of property, which
is acceptable in Greek Legislation only as far as movable things are concerned, the transfer
of the title of property of an immovable to secure a debt being not among the legal causes
of transfer of the title of property of an immovable.Yet, as it was exposed hereinabove, by
application of article 1033 of the Civil Code, the presence of a legal causa is one of the
conditions sine qua non for the transfer of the title of property of an immovable to take
validly place.

The legal causes for the transfer of the title of property of an immovable are the sale, the
exchange, the donation, the inheritance and other legal causes expressly provided for by
the Law, such as, for instance, the transfer, following divorce, from one of the spouses to
the other of part of the immovables acquired during the marriage, by application of the
relevant legal disposition governing the splitting of the assets acquired by the spouses
during the marriage, when same is dissolved. The security (guarantee) of a debt being not
among the legal causes of transfer of the title of property of an immovable, the agreement
for repurchase of an immovable could be declared null and void in case the buyer –
borrower could prove to the Court that the first sale was a fiduciary one.

c. the resolutory condition, by application of which, if the buyer does not pay his debt within
an agreed period of time, the title of property is automatically acquired anew by the initial
vendor, can be used in case of sale of an immovable where the buyer is granted a credit of
time to pay the purchase price (either in whole or in part). In case part of the price has
been already paid by the buyer and the resolutory condition is fulfilled, the vendor must, in
principle, pay back the amount which he has received. However, in general, the notarial
deed pertaining to the sale of an immovable under resolutory condition, will provide that, in
case this condition occurs, the amount initially collected by the vendor shall be kept by him
as an indemnification for the dissolution of the sale.

In case of sale of an immovable under resolutory condition, same will be registered in the
name of the buyer, in the Registers of the competent Land Registry. The relevant mention
will be striked out only if the concerned person (buyer) produces documents evidencing that
he has fully paid the sale price and, therefore, the resolutory condition is lifted.

4. Protection of the consumer.

In Greek Legislation, there are no particular legal rules protecting the consumers regarding
the issues under review in the frame of the present report.

A big issue, which has created many problems and conflicts between the Banks and their
clientèle is the one regarding the right granted to the Banks to capitalize the accrued
interests in case of non payment by the lender and to calculate arrears interests also on the
amount of the capitalized interests. This is an exception of the rule set forth by the first
paragraph of article 296 of the Civil Code, according to which interest can be calculated on
any kind of interest provided the parties have agreed to that or if interest on interest is
claimed by means of a law – suit. In both cases, interest can be claimed only on interest
remaining outstanding for at least one year. The relevant agreement of the parties must
have been concluded or the law – suit must have been served upon the lender after the
above period of one year has elapsed.

By application mutatis mutandis of the second paragraph of article 296 and, mainly, by
application of article 110 of the Introductive Law of the Civil Code, Banks are authorized to
stipulate beforehand that interest shall be calculated on accrued interest generated by loans
granted by them, in case they remain outstanding for six (6) months. In many cases –
voluntarily (especially when the arrears interests rate exceeded thirty per cent (30%) in
Greece) or by negligence – the Banks did not take action against the borrowers for many
years, with as a result that the accumulated and capitalized interests often exceeded the
initial amount of the loan ten or even more times. The consumers claimed that the Banks
were making abuses of their above right and at some stage Law no 2789/2000 was
promulgated, which has put a ceiling to the total amount (capital plus interests), which can
be claimed by the Banks from the borrower(s) regarding the refunding of loans granted to
them, which ceiling varies depending on the date on which the loan has been granted.
III. THE TRANSBORDER LOAN WHICH IS SECURED BY A MORTGAGE AND THE REAL
SECURITIES.

1. The mortgage and the claim secured by it may be subject to two different Jurisdictions.

1.1. More precisely, in case the claim derives out of an agreement, the parties are free to
choose the Legislation which will govern it, both by application of the relevant dispositions
of the Treaty of Rome dated 1980, which Greece has ratified by means of Law number
1792/1988, as well as by application of article 25 of the Greek Civil Code, which continues
to be applicable when one of the contracting parties is a citizen of a country having not
ratified the Treaty of Rome. Said article provides that the contractual obligations are
governed by the Law to which the parties have submitted themselves. This rule sets forth
the same principle as the Treaty of Rome.

Yet, article 33 of the Civil Code provides that a disposition of a foreign Legislation is not
applicable in case its application is in conflict with boni mores or, in general, with public
order. Said rule constitutes a kind of limitation of the liberty of the contracting parties to
select the Law, which will govern their contractual relations. On the other hand, article 281
of the Civil Code provides that the exercise of a right is prohibited if it obviously exceeds the
limits imposed by good faith or boni mores or by its social or economic aim. This is a
limitation to the freedom of action of the beneficiary of a right in order to protect others
from abuses, any abuse being an illicit act.

If they are put together and analyzed, the above mentioned legal dispositions allow to say
that, although in principle the parties are free to select any Legislation in order for it to
govern their contractual relations, said liberty is limited by two elements: first, if the Law
selected contains dispositions which are contrary to boni mores or to the internal public
order of Greece, they will not be applied and second, in case the parties exercise in an
abusive way their right to select the Law, which will govern their contractual relations, in
order, for instance, to avoid the application of imperative rules contained in Greek
Legislation, being, for any reason, unfavourable either to one of the contracting parties or to
both of them, the choice of a foreign Legislation will not prevent the application of such
imperative dispositions of Greek Legislation, all the more that the non respect of imperative
legal dispositions contravenes, in general, to the public order of a State and possibly to boni
mores.

1.2. As far as mortgage is concerned, it shall be always governed by Greek Legislation
according to article 27 of the Civil Code, which provides that the possession and the real
rights on movables or immovables are governed by the Law of the State where they are
located. Consequently, if the immovable, which is burdened with the mortgage is located in
Greece, the lex rei sitae, i.e. the Greek Legislation, shall be applicable.

Αrticle 11 of the Civil Code provides that a legal act is formally valid if its form is in
conformity with the provisions of the Law governing its substance or with the provisions of
the Law of the place where the act was concluded or with the provisions of the national Law
of all the parties to the act.

By application of the combined dispositions of the above mentioned articles 27 and 11 of the
Civil Code, the act by virtue of which the right is granted for inscription of a mortgage on an
immovable located in Greece should have the notarial form. The relevant notarial deed can
be executed either before a Notary Public in Greece or before a Consul of Greece acting as a
Notary abroad.

The third option provided by article 11, i.e. the application to the form of the act of the
National Legislation of all the parties it is put aside by article 27 in the case of a mortgage
because if the parties are not Greek citizens, the application of their National Legislation
would put aside the application of the lex rei sitae, i.e. of the Greek Legislation, the
dispositions of which governing immovables and real rights on immovables are, generally,
rules of public order (compulsory, mandatory, imperative rules).
As a conclusion, it can be stated that the contract generating the claim, which will
be secured by the mortgage, such as, for instance, the loan agreement, can be
governed by a foreign Legislation, while the mortgage shall necessarily be
governed by Greek Legislation, the dispositions of which regarding mortgage are
rules of public order. Thus, as far as mortgage is concerned only the second option
offered by article 11 of the Civil Code regarding the legal form of the relevant act
may be applied.

2. A mortgage may secure a claim expressed in foreign currency, but the
inscription of the mortgage must mandatorily mention also the equivalent amount
in euros based on the rate of the day of the inscription.

Article 291 of the Civil Code provides that a monetary debt expressed in foreign currency,
which is payable in Greece, can be settled by the debtor, if he wishes so, in the currency of
the State (Greece), based on the rate of the foreign currency on the date on which the
payment is done, unless the parties have agreed otherwise.

Although, based on the above mentioned article it was possible – theoretically speaking – to
conclude an agreement having as object a monetary debt expressed in foreign currency,
since 1941 when the Civil Code was put into force, practically speaking, the field of
application of said article was very limited because, up to the liberalization of the movement
of capitals between Greece and the States Members of the European Union, but also
between Greece and other States non Members of the European Union, which has started
gradually in 1986 but was achieved in 1996, Greece having formulated reserves, especially
regarding its citizens, in connection to the free circulation of capitals, a contractual
obligation could not be expressed and paid in foreign currency but only in exceptional cases,
the most important of which and the most frequent was the international trade. But even in
case of transactions regarding foreign trade, an import license had to be obtained and the
transportation documents were handed to the importer only by the intermediary of a Bank,
either against payment in cash of the price of the imported merchandise or against
acceptance by the importer of commercial drafts (bills of exchange, promissory notes etc..)
to secure the payment of the price of the imported merchandise in the cases where the
foreign exporter had granted a credit to the greek importer in this respect.

IV. THE EXPLOITATION OF THE SECURITIES

1. It is very well known that the mortgagee cannot become automatically the owner of the
mortgaged immovable. When his claim becomes due, the mortgagee is entitled to activate
the mortgage through compulsory enforcement on the immovable which is burdened by the
mortgage. Yet, as already exposed hereinabove, in order to proceed to the compulsory
enforcement, the creditor must have an enforceable title.

According to article 904 of the Code of Civil Procedure, the enforceable titles are :

a. the final judgments, as well as the judgments which have been declared provisionally
enforceable.

b. the arbitral awards.

c. the Minutes of the hearings of the Courts, which contain a compromise or which fix the
judicial expenses.

d. the notarial deeds.

e. the orders of payment and the orders for the restitution of the use of an immovable as
soon as they cannot be any more attacked by means of an opposition (appeal) or as soon as
the opposition (appeal) possibly formed against them by the debtor has been rejected by
means of a final judgment.

f. the foreign titles, which have been declared enforceable in Greece.
g. the orders and the acts which are considered by the Law as enforceable titles.

Now that Regulation number 805/2005 of the EU Council has been put in force, a
compulsory enforcement could be done based on an European Enforcement Title.

2. A foreign title can be declared enforceable in Greece when the conditions provided for by
the combined dispositions of articles 905 and 323 para. 2 to 5 of the Greek Code of Civil
Procedure are fulfilled.

More particularly, article 905 of the above Code provides that, subject to what is provided
by International Treaties concluded by Greece with other State(s), the compulsory
enforcement can be done in Greece based on a foreign title as of when same is declared
enforceable by means of a judgment of the Court of First Instance which is ratione loci
competent (i.e. the Court of First Instance in the territorial area of which the domicile or, in
the absence of domicile, the residence of the debtor is located and, in case the debtor has
neither domicile nor residence in the Greek Territory, the Court of First Instance of Athens).

The above Court declares a foreign title enforceable provided same is enforceable by
application of the Legislation of the home State and provided it is not contrary to boni
mores and to public order.

3. If the foreign title is a judgment, which was rendered by a foreign Court, it must – in
addition to the above conditions required for any foreign title to be declared enforceable in
Greece – (a) have become final according to the Legislation of the home State, (b) the
Courts of the home State having rendered it must be considered as having competency to
try the case according to the relevant dispositions of Greek Legislation, (c) the litigant
having lost the case must not have been deprived of the right to defend himself and, in
general, to participate to the trial and, (d) the foreign judgment must not be adverse to a
judgment rendered by a Greek Court in the same case.

A judgment, rendered by a civil or a commercial Court of a State Member of the European
Union, could be declared enforceable in Greece by application of the dispositions of the
Treaty of Brussels dated September 27, 1968, which Greece has ratified by virtue of Law
number 1814/1988 entered into force on April 1, 1989, which provides a shorter procedure
and simplier conditions than those enumerated hereinabove provided by the above
mentioned articles of the Greek Code of Civil Procedure.

The Treaty of Brussels is now replaced by Regulation number 44/2001 of the EU Council,
which provides a procedure and conditions even simplier than those provided for by the
Treaty of Brussels.

4. It accrues out of the above that the compulsory enforcement seeking collection of a claim
secured by means of a mortgage burdening an immovable located in Greece can be pursued
by virtue of a notarial deed signed before a Notary abroad provided the deed in question
has been declared enforceable in Greece. Reference is done, of course, to the act generating
the claim and not to the act regarding the constitution of a mortgage, which must be
necessarily signed before a Greek Notary or a Greek Consul acting as a Notary abroad, as
per what has been exposed hereinabove.

It is reminded that, if the act generating the claim (for instance the loan agreement) is in
the form of a notarial deed including also the consent of the one party for the granting to
the other of a right for inscription of a mortgage, it shall be signed either before a Notary in
Greece or before a Consul of Greece abroad. In such a case the relevant notarial deed can
be enforced in Greece directly provided it has been declared enforceable by the Notary (or
the Consul acting as a Notary) at the request of the contracting parties.

Actually, in the cases where the claim secured by a mortgage accrues out of a notarial deed
containing a clause stipulating that, if one or the other of the contracting parties does not
fulfil a monetary obligation of his, the other contracting party shall be allowed to proceed to
the compulsory enforcement on the assets of the debtor without having recourse to any
judicial procedure, the mortgagee has as of the beginning an enforceable title, which he
may use only when his claim shall become due, of course. This is applicable only as far as
notarial deeds signed in Greece or before a Greek Consul acting as a Notary abroad are
concerned, since – as it was exposed hereinabove – the notarial deeds signed abroad must
first be declared enforceable in Greece.

5. In case the mortgagee has not an enforceable title as of the beginning, he will have to
obtain one among those mentioned hereinabove under (a), (b), (c), (d), (e) and (f) (the
acts mentioned above under (g) being mainly acts of the administrative authorities
considered enforceable by the Law and having usually as object the collection by the Public
Treasury, the Legal Entities governed by Public Law, the Organisms of Social Security etc..,
of taxes and other duties due to them).

The obtaining of an enforceable title after the debt becomes exigible will take a rather long
time, even if the conditions are fulfilled for the creditor to obtain an order of payment, which
is rendered following a rather short procedure. Actually, in case the debtor makes an
opposition against the order of payment and said opposition is accepted by the Court, the
litigation which will be opened through it (the opposition) will last almost as long as the
trial, which would take place in case the creditor had filed with the competent Court an
ordinary action on the merits. It is therefore clear why it is advisable to give to the
agreement generating the claim the form of a notarial deed in spite of the relevant
expenses, which are often prohibitive.

5.1. Once the enforceable title is obtained, the mortgagee may proceed to the compulsory
enforcement on one or more movables or immovables belonging to the debtor. He has not
the obligation to proceed to the compulsory enforcement starting from the immovable,
which is burdened with the mortgage, but it goes without saying that this is the immovable
which the creditor will choose, since – as stated above – his claim will be satisfied by
priority by means of the proceeds of the sale by public auction of the immovable burdened
with the mortgage, which would not be the case if the compulsory enforcement had been
done on other assets of the debtor.

5.1.1. The compulsory enforcement is done by a Court Bailiff and a Notary, according to the
procedure described herebelow.

The first act of the procedure of compulsory enforcement consists of the service by Court
Bailiff upon the debtor of a certified photocopy of the original of the enforceable title
together with an injunction to pay the amount(s) due. After three (3) working days will have
elapsed as of the above notification – injunction, the creditor has the right to instruct, a
Court Bailiff to proceed to the enforcement of the title. The above instructions to the Court
Bailiff must be in writing and signed by an attorney – at – law. The creditor cannot act by
himself. This applies to any instructions given to a Court Bailiff.

The debtor may file with the Court of First Instance ruling according to the dispositions
applicable to Conservative Measures an application seeking the stay of the execution of the
enforceable title.

The Court may order the stay of the execution, with or without warranty, if it considers that
the compulsory enforcement would create to the applicant damages which could not be
remedied. In case the stay of the execution is ordered, the procedure is blocked until a final
judgment is rendered regarding the opposition, of the debtor. To be noted that the filing of
an opposition (appeal) against the enforceable title is a prerequisite for the filing of an
application seeking the stay of its execution.

Although the debtor may file an opposition against the above notification- injunction within
fifteen (15) working days as of the service upon him of said notification – injunction, he
should do so within the three (3) working days following the above notification in order to
be in a position to file the application seeking the stay of the execution of the enforceable
title before the Court Bailiff proceeds. This is advisable, but if it is not done and the Court
Bailiff proceeds, he shall be stopped from further action in case the Court orders the stay of
the execution.

If the application seeking the stay of the execution is rejected or in case the debtor does not
file any such application, the Court Bailiff may proceed - after the three (3) above
mentioned working days will have elapsed - to the attachment of the immovable burdened
with the mortgage, according to relevant written instructions given to him by an attorney –
at – law, on the original of the enforceable title, which the Court Bailiff must have in his
hands when he proceeds to the attachment and up to its deposit to the Notary, who he will
designate in order to conduct the procedure of the sale of the immovable by public auction.

It has to be strengthened, since it highlights the importance of the mortgage, that the non
secured creditor starting the procedure of the compulsory enforcement has no privilege at
all vis – à – vis the other creditors of the debtor, who will announce properly and in due
course their respective claims against the debtor. On the contrary, the mortgagee – even if
he is not the creditor initiating the compulsory enforcement procedure - shall be satisfied by
priority out of the proceeds of the sale by public auction of the immovable burdened with
the mortgage, as per what will be exposed in detail below.

5.1.2. The Court Bailiff must prepare a Report regarding any acts connected to the
compulsory enforcement, to which he proceeds. Said Minutes must contain – among others
– a detailed description of the attached immovable, as well as of the claim for the collection
of which it is proceeded to the compulsory enforcement. In the Report in question, the
Court Bailiff must mention the name of the Notary who he designates to conduct the sale by
public auction, the day and the place where the sale by public auction of the immovable
burdened with the mortgage is fixed and the price of the first offer, which represents, in
general but not necessarily, half of the value which is attributed by the Court Bailiff to the
immovable in the frame of the same Minutes as above. If the immovable is located in a
region where the system of the “objective” value attributed by the Ministry of Finance to the
immovables is applicable, the value, which will be attributed by the Court Bailiff to the
attached immovable, cannot be lower to its “objective” value.

A copy or a summary of the Report regarding the attachment must be notified to the
debtor, to the proprietor or to the person having possession of the immovable burdened
with the mortgage in case the proprietor or the possessor are third parties, as well as to the
Registrar of the Land Registry in the territorial area of which the immovable is located.

Once said notifications are done, the Court Bailiff must deposit the enforceable title with the
Notary designated by him to proceed to the sale by public auction, together with the
affidavits regarding the notification of the injunction, the Report regarding the attachment
and the affidavits regarding the notification thereof to the debtor and to the Registrar of the
Land Registry.

As of the day of the notification as above of the Report regarding the attachment, it is
prohibited to the debtor to dispose of the attached immovable. In case, in spite of said
prohibition, a disposition of the attached immovable takes place, it is null and void as far as
the creditor having instigated the procedure of the compulsory enforcement is concerned
and also vis – à – vis the creditors, who have announced (declared) their claims before such
disposition.

The Report regarding the compulsory attachment must be recorded in the Register of
Attachments on the same day on which they are notified upon the Land Registar.

After the registration as above is done, it is prohibited to have another compulsory
attachment imposed on the attached immovable, otherwise the second compulsory
attachment is null and void.

On the contrary, a compulsory attachment may be imposed on immovables on which a
conservative attachment has been already imposed, as a conservative measure to secure a
claim, but a conservative attachment cannot be imposed on immovables on which a
compulsory attachment has been previously imposed.

The Court Bailiff designates a custodian of the attached immovable, which is henceforth set
under the guardianship of the custodian.

If the immovable is occupied, the tenant – regardless to whether he is the landlord or not -
is designated by the Court Bailiff as custodian of the attached immovable.

The Court Bailiff must publish at least fifteen (15) days before the sale by public auction a
summary of the Report of the attachment in the main daily paper published in the
Municipality or in the Community in the territorial area of which is located the place where
the sale by public auction will take place. If no such paper is published, the summary of the
Minutes of the attachment must be published in the main daily paper published in the
capital city of the Department from which the above Municipality or Community depends.

The above formalities of publicity are provided for by the Law in a mandatory way and they
entail the nullity of the sale by public auction if they are not fulfilled.

In Greece, the sale by public auction takes place always on Wednesday, between noon and
two o’clock in the afternoon, at a seat of the Municipality or of the Community in the
territorial area of which the immovable is located, in a room especially arranged to this end.

The sale by public auction of an immovable cannot take place before forty (40) days have
elapsed as of the day where the compulsory attachment has been imposed. The sale by
public auction cannot take place during the period from August 1 to September 15, of every
calendar year.

5.1.3. On the day which was fixed, the Notary proceeds to the sale by public auction of the
attached immovable.

The immovable is adjudicated to the bidder offering the higher price after an invitation to
offer a higher offer is formulated three (3) times by the Notary.

The adjudicator has the obligation to pay the price in cash, to the Notary who conducts the
sale, as soon as the adjudication is done. The Notary must deposit the proceeds of the sale
with the Consignations and Loans Fund, no later than the third working day after the day of
the sale.

In case the adjudicator does not pay the price, the Notary must make an injunction to him
to pay the amount due within the two (2) following days. The injunction is notified by Court
Bailiff. In case the adjudicator does not pay within five (5) working days following the
injunction, the adjudication becomes null and the next best bidder is invited to pay, on a
fixed day, the amount which he has offered.

If, to the opinion of the Notary, it is impossible or particularly difficult, to invite the next
best bidder, for reasons which must be referred to in the Minutes which he draws up to this
end or in case the above mentioned invitation has no results, a new sale by public auction
takes place, which is activated by the Notary being in charge of the initial sale or by the
creditor having instigated the procedure of compulsory enforcement or by the debtor or by
the third party being the proprietor of the immovable or by any creditor, who has declared
his claim, provided same accrues out of an enforceable title.

The initial adjudicator, who has not paid the price, cannot participate to the new sale by
auction, but he may, until same starts, pay the amount due plus arrears interest, as well as
the expenses and request that the immovable be adjudicated to him.

In case the price, which was obtained during the first sale by public auction is not obtained
during the new sale, the first adjudicator, who has not paid the price, is liable to pay the
difference, plus arrears interests.

If neither the adjudicator at the new sale by public auction pays the price, a new sale by
public auction may take place following the same procedure described hereinabove.

In case there is no bidder in the attempted sales by public auction, the immovable is
adjudicated to the creditor having instigated the procedure of compulsory enforcement
(regardless to whether he is a mortgagee or not) if he formulates a request to this end, but
against the price of the first offer, which was fixed by the Court Bailiff in the frame of the
Report regarding the attachment. If the creditor in question does not make such a demand,
a new sale by public auction takes place within the forty (40) following days.

If no adjudication is done during the new sale by public auction as well, the competent
Court may, upon demand of any person having a legal interest in this respect, order that a
new sale by public auction be done within the following thirty (30) days, against a sale price
equal or lower than the first offer. The Court may also authorize the Notary to sell freely the
attached immovable at any price, to the person at the request of whom it was attached or
to a third party against a price fixed by the Court.

If the new sale by public auction has no results or in case it has not been possible to
achieve a free sale, the Court may lift the attachment and order that a new sale by public
auction be done later, against a price equal to or lower than the first offer.

5.1.4. As already exposed, the sale by public auction is achieved by means of the
adjudication.

In case the adjudicator is the mortgagee, the Notary may allow him not to pay part of the
price corresponding to the whole or part of the amount of his claim which is guaranteed by
the mortgage, up to the day on which the Table of allotment of the proceeds of the sale
becomes final.

Until the adjudication takes place, the debtor or the third party being the proprietor of the
immovable burdened with the mortgage has the right to settle the expenses and the
claim(s) of the creditor having instigated the procedure of compulsory enforcement and of
the other creditors, who have an enforceable title and have announced their claims properly
and timely and their declarations have been recorded in the Registers of Attachments of the
Land Registry in the territorial area of which the immovable is located in order to take back
or to keep the possession of the immovable.

5.1.5. In case the price is sufficient in order to satisfy the creditor having instigated the
procedure of the compulsory enforcement (regardless to whether he is a mortgagee or not),
as well as the creditors who have announced their claims (among which the mortgagee,
who must also declare his claim in case the procedure of compulsory enforcement has not
been instigated by him), the Notary pays to each creditor the amount to which he is
entitled, after deduction of the expenses of the enforcement procedure.

In case the proceeds of the sale by public auction are not enough to satisfy the above
mentioned creditors, the Notary draws up a Table of allotment of the proceeds of the sale.
The allotment to the creditors is done in the following way : the first to be paid are the
creditors having a general privilege, among whom the most important are the Public
Treasury, the Municipalities, the Communities, for their claims regarding taxes, duties etc…
concerning the current year and the Social Security Organisms regarding claims of them
generated within the two (2) years preceding the day where the sale by public auction took
place. The creditors having a special privilege follow. The claims secured by a special
privilege are, mainly, those connected to the expenses incurred for the conservation of the
attached immovable, which is sold by public auction. The Law treats as creditors having a
special privilege also the mortgagees and the creditors having a pledge on one or more
movable assets (of the debtor or of a third party).

In case there are creditors having general privileges provided for by article 975 of the Code
of Civil Procedure and creditors having special privileges provided for by article 976 of the
Code of Civil Procedure, one third (1/3) of the proceeds of the sale by public auction
available for payment to the creditors is allotted to the claims guaranteed by general
privileges, while the remaining two thirds (2/3) are paid to the creditors having a special
privilege.

Any amount possibly remaining out of the portion, which is to be allotted to the claims
secured by general or by special privileges respectively, as the relevant portions are defined
in the precedent paragraph, is used to satisfy - should the case occur - the non satisfied
claims of the other category (creditors having a general privilege or creditors having a
special privilege). Any amount possibly remaining after the creditors having a general
privilege and those having a special privilege (including mortgagees) are satisfied is
distributed to the remaining creditors.

To be noted that the mortgagee who has a mortgage of first rank will absorb such portion of
the proceeds of the sale, which is allotted by the Law to the category of creditors having a
special privilege, corresponding to the full amount of his claim. Consequently, creditor(s)
having possibly a mortgage of second rank shall be satisfied – in whole or in part – only if
an amount remains to be distributed after full satisfaction of the mortgagee having a
mortgage of first rank and so on for the mortgagees / creditors having a mortgage of third,
fourth, fifth etc.. rank.

To be allowed to participate in the procedure of the sale by public auction, each bidder must
deposit, either in cash or by means of a bank letter of guarantee or by means of a bankers’
draft, a guarantee equal to one third (1/3) at least of the amount of the first offer.

5.1.6. If between the day fixed for the sale by public auction and the day of the attachment
a period of time of more than four (4) months has elapsed without the sale is achieved, any
creditor whose claim is grounded on an enforceable title and which has served upon the
debtor an injunction to pay, may request from the competent Court to allow him to continue
the procedure of the enforcement unless he has already declared his claim to the Notary
appointed to conduct the sale by public auction, in which case he may continue the
procedure of the sale by public auction merely by making a relevant written statement to
the Notary.

5.1.7. Following an application of the debtor against whom the compulsory enforcement is
pursued, which has to be filed at least five (5) working days before the day fixed for the
sale by public auction, otherwise it is rejected as lately done, the competent Court may
order the stay of the procedure of the sale (article 1000 of the Code of Civil Procedure).
Such a stay cannot last for more than six (6) months as of the day initially fixed for the sale
by public auction. In case the duration of the initial stay is less than six (6) months, a
second stay may be granted by the Court provided there are exceptional reasons in this
respect. The stays cannot exceed six (6) months in total. When it is granted, the stay is set
under condition of payment of : (a) the expenses of the procedure of the sale by public
auction and (b) of one fourth (1/4) at least of the amount due in capital to the creditor
having instigated the procedure of the compulsory enforcement, unless for exceptional
reasons the Court fixes said amount to a smaller portion of the amount of the claim.

5.1.8. Article 1001 of the Code of Civil Procedure provides that, in case of attachment of
immovables where industrial, handicraft, hotel or touristic enterprises or other production
enterprises are installed, which have equipment and form an economic entity, if more than
one immovables have been attached by means of the same Report of Attachment, they
must be sold by public auction together, in case they constitute, from a functional view –
point, an entity which deserves the enterprise or the production unity installed in one of
them.

Almost all the rules applicable to the compulsory enforcement are mandatory.

As already exposed above, the creditors which have registered on the immovable sold in
sale by public auction a prenotice of mortgage are only provisionally classified. The Notary
deposits the amounts of their claims to the Consignations and Loans Fund until they obtain
a final judgment allocating them their claim based on which they may convert the prenotice
into a mortgage. The conversion has retroactive effects i.e. the concerned creditor is
considered as a mortgagee backwards as of the day of the inscription of the prenotice.
Consequently, if other mortgages have been registered after the inscription of the prenotice,
their rank follows the one of the converted prenotice.

5.1.9. Article 1019 of the Code of Civil Procedure provides that, if the sale by public auction
does not take place within one (1) year as of the day on which the attachment was imposed
or if new auctions have not taken place within six (6) months as of the day of the first
attempted one, the compulsory attachment ceases to be valid by virtue of a judgment
rendered by the District Court in the territorial area of which the attachment has been
imposed, following a relevant application of any person having a legal interest to this end.
In case there was a stay of the execution, the period of the stay is not counted in the period
of one (1) year mentioned hereinabove.

5.1.10. If the procedure of the compulsory enforcement is not activated by the mortgagee,
but by another creditor, the mortgagee shall have to announce his claim to the Notary
conducting the sale by public auction within fifteen (15) days as of the day of the sale. The
claim guaranteed by means of the mortgage shall be collocated in the way described
hereinabove.

6. Besides the compulsory enforcement on an immovable through its sale by public auction,
any creditor may file an application with the competent Court of First Instance ruling
according to the dispositions regarding Conservative Measures seeking that a judgment be
rendered ordering the compulsory administration of one or more immovables belonging to
the debtor. .

6.1. The immovable is under compulsory administration as of the day on which the relevant
judgment is served by Court Bailiff upon the debtor.

As of the notification of the judgment as above, the debtor is deprived of the administration
of the immovable.

The judgment ordering the compulsory administration of an immovable must designate the
administrator, who shall administer the immovable so as to obtain out of its administration
an amount being enough to satisfy the creditor having instigated the procedure of
compulsory enforcement and the creditors, who have announced their claims. The
administrator should however take care so as the immovable be kept in good shape and so
as acts diminishing its value be avoided.

The creditor, who applies for the setting of an immovable under compulsory administration,
must have an enforceable title and must have previously served upon the debtor an
injunction to pay, which had no results.

6.1.2. The judgment ordering the setting of an immovable under compulsory administration
must be registered, at the initiative of the creditor having applied for it, in the Attachment
Registers kept at the Land Registry in the territorial area of which the immovable is located.

The above registration does not prevent the transfer of the title of property of the
immovable, which continues however to be under compulsory administration, even after it
is sold.

If the immovable is attached – by the same creditor or by another – the compulsory
administration ceases as of the day on which the sale by public auction takes place.
Likewise, the compulsory administration ceases if the debtor is declared into bankruptcy. In
the two precedent cases, any person having a relevant legal interest in this respect may ask
for the strike out of the registration regarding the compulsory administration.

The debtor may be nominated as administrator in case the Court considers that this is
appropriate for the best administration of the immovable. If the debtor is nominated as
administrator, the Court nominates simultaneously a supervisor.
6.1.3. The compulsory administration of an immovable cannot be pronounced in the
following cases :

a. if the Court considers that the income accruing out of the immovable is not enough to
satisfy the claim of the applicant within a reasonable period of time.

b. If the Court considers that the amount of the claim does not justify the setting of the
immovable under compulsory administration.

c. In case the immovable has a small value and its compulsory administration is anticipated
by the Court as non profitable.

6.1.4. The compulsory administration ends by means of a judgment rendered by the Court
of First Instance of the place where the immovable is located following an application of the
debtor or of the creditor or of any other person having a relevant legal interest, in the
following cases :

a. If all the claims of the creditor having applied for the compulsory administration, as well
as those of the creditors having announced their claims, have been satisfied.

b. If the Court considers that the continuation of the compulsory administration is not
appropriate or harms the interests of the debtor and

c. if the creditor, who has asked for the immovable to be put under compulsory
administration, has not taken care, within a reasonable period of time as of the day on
which the judgment ordering the compulsory administration has been notified to the debtor,
so as the person designated as administrator starts performing his duties.

Based on the above judgment – when same becomes final – it is proceeded to the strike out
of the annotation done in the Attachments Registers regarding the compulsory
administration. Following such strike out, the compulsory administration ceases ipso facto.

V. THE REAL SECURITIES IN CASE OF BANKRUPTCY OF THE DEBTOR.

By application of article 537 of the Code of Commerce, any mortgage, which is registered by
virtue of a private title or by virtue of a judgment, in order to guarantee a debt of a
bankrupt person, which (claim) existed before the registration of the mortgage, is null if it
has been done during the suspect period, i.e. during the period starting as of the day fixed
by the Court as being the day on which the bankrupt trader has stopped his payments or
ten (10) days before the date in question. The above apply also to the prenotices of
mortgage, but not to mortgages the inscription of which is done based on a relevant Law.

On the other hand, article 539 of the Code of Commerce provides that titles validly acquired
in order to register a mortgage can be registered until the day of publication of the
judgment having declared the bankruptcy. The inscriptions done after the cessation of
payments or during the period of ten (10) days preceding the cessation of payments can be
declared null in case more than fifteen (15) days have elapsed between the date of the title
(by virtue of which the mortgage has been registered) and the inscription of the mortgage.
The above period of fifteen (15) days is extended for one (1) day for any distance of four
(4) kilometres between the place where the title allowing to register the mortgage has been
obtained and the place of inscription of the mortgage (place where the competent Land
Registry is located).

The difference between the questions governed by the two above mentioned articles of the
Code of Commerce is obvious. Article 537 provides the ipso facto nullity of a legal act,
established deliberately by the person having been declared bankrupt, by means of which
he grants a right of mortgage to a third party, who already had a claim against the person
declared bankrupt, as well as the nullity of the right to register a mortgage accruing out of a
judgment seeking to secure an already existing claim, if the act was done or the judgment
was rendered after the date on which the person declared bankrupt has ceased his
payments or ten (10) days before said date. On the contrary, article 539 provides the
possibility to obtain the cancellation – at the request of any person having a legal
interest in this respect, as well as at the request of the receiver – of the inscription of a
mortgage : (a) which is done by virtue of a private act of the person declared bankrupt or
by virtue of a judgment, which existed before the date of the cessation of the payments, but
which is registered after said date or within the ten (10) days preceding it and (b) when the
period of time between the date of the title, which will be registered (private act or
judgment) and the date of the inscription of the mortgage is longer than fifteen (15) days.

VI. THE STANDARDIZATION.

1. To our opinion, a standardization of the legal systems applicable to immovables and to
real securities constituted on immovables – reference being done mainly to the mortgage –
should be attempted to any possible extent.

The State Members of the European Union constitute already a unified market, in many
sectors at least. Consequently, it is doubtless that the German, the French, the English or
the Spanish bankers should be in a position and the aware of what they should be aware of
in order to reach quick decisions regarding the acceptance or not of a real security, which is
possibly offered to them by a potential borrower, on an immovable located in another State
Member of the EU.

1.1. Yet, at present at least, a banker could not make quick decisions if the immovable is
located in Greece since – as exposed hereinabove - the verification of the titles of property
regarding immovables, which is done starting as of the name of the present proprietor of
the immovable and must cover a period of twenty (20) years backwards, is time consuming
and expensive, especially in the cases where, in order to cover the above mentioned period
of twenty (20) years, a lawyer must study twenty (20), fifty (50) one hundred (100) or
even more notarial deeds before he is in a position to answer whether yes or no the person
claiming to be the proprietor of the immovable being the object of the verification has or
has not good title of property on it.

1.1.2. The standardization is a must in view of the volume, which increases the more and
more, of transactions, not only between enterprises and / or private persons, who do not
reside in the same State of the European Union, but also between persons residing in one
State Member of the European Union and persons residing in any other State, which is not a
Member of the EU (as, more particularly, the United States of America, Switzerland, Japan
etc..). Such evolution is very impressing in Greece and in other States (such as, for
instance, Spain) where the movement of capitals were regulated and could take place only
in the cases and under the conditions provided for by very strict legal dispositions and, in
general, following a relevant authorization of the competent Monetary Authorities. Actually,
before the free movement of capitals became free, an enterprise located in Greece could –
for instance - contract a loan abroad only after express authorization of the Monetary
Committee of the BANK OF GREECE. The BANK OF GREECE is not only the organ
supervising the commercial Banks, but it also elaborates the structure of the bank system in
force in Greece, by means of studies and propositions submitted to the Minister of Finance
and by means of Decisions of its Governor, which are issued based on a delegation of
authorities to this end provided for by various relevant Laws and Presidential Decrees.

2. The introduction in the Continental Law systems of notions contained in the Common Law
systems, such as, for instance, the floating charge, contributes to the standardization, but,
for the moment being, creates problems of adaptations as those who do not agree with
them claim. To our opinion, the adaptation problems will be overcome very quickly. We do
believe that the introduction of such notions is worthwhile, not only for standardization
reasons but also in order to introduce in the various Legislations new “products”, which are
flexible and simultaneously provide solid guarantees, which might have as a result that the
businesses expand even more.

Important new “products” have been introduced in Greek Legislation by means of Law
number 2844/2000, such as the pledge on an undertaking as a whole, the floating charge
etc… It is doubtless that the fact to be able to constitute a guarantee on an enterprise will
allow many businessmen, who are not proprietors of any immovables, to obtain loans in
order to expand their business, which is obviously positive for the national economy.

Further, as far as the floating charge is concerned, it is very encouraging for the debtor to
know that he may transfer the title of property of immovable(s) being the object of the
guarantee, which he has granted to his creditor, provided another asset of his will be
substituted to the immovable in question, especially in the cases where the borrower grants
a security on an asset constituting its sole valuable asset in the specific moment. Yet, later
on he might acquire other assets, which could constitute for the lender a guarantee as
satisfactory as the first one, while the fact for the borrower to make free the asset initially
burdened in favour of the lender could be of a major importance. For example, the borrower
could sell this specific asset for a high consideration price because there is a candidate very
interested in it and use the sale price for the expansion of his enterprise. This could be
interesting for the borrower and simultaneously could possibly not harm the interests of the
lender, since another asset would be substituted as a guarantee to the one initially
burdened in his favour. Obviously, in all the law systems, a substitution of guarantee is
conceivable, regardless to whether we are in presence of a floating charge or not, but it
entails formalities, expenses and time, which are limited in case the substitution is done
based on a floating charge, by application of relevant express legal dispositions governing
the matter, as it is the case now.

It goes without saying that the introduction in a legal system, which ignored them, of
“products” such those mentioned hereinabove, i.e. the floating charge, the pledge on the
undertaking etc.. assumes that dispositions are set forth seeking to protect the borrower
and, in a more general way, the debtor, which is usually the weaker party (consumer), in
order to secure the necessary equilibrium between his interests and those of the creditor.
This is why it is necessary to organize such new “products” by including in any concerned
Legislation legal dispositions, which prevent the abuses by the borrower and of the creditor
in general, as well as the imposition upon the debtor of burdens and restrictions heavier
than needed.

Important Notice

Whilst the writer believes these notes to be accurate, they are a brief summary of some
complex subjects. Neither the writer nor Cotsaki & Nerantzis Law Office can accept
responsibility for any accidental errors or omissions. These notes are not a substitute for
taking detailed legal advice on any actual case.

Athens, October 15, 2006

Catherine Cotsaki
Lawyer
12, Vassileos Constantinou Avenue
ATHENS 116 3
GREECE
Tel. : 0030210 – 7522518
Fax :0030210 – 7567520
cotsakilaw@internet.gr

				
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