Is Purchasing Real Estate in Malta Safe?

An overview of the safeguards provided at law

| 14 May 2020

Purchasing Real Estate in Malta

Purchasing property as a first home or as an investment is at all times an important decision. Purchasers are keen to ensure that their investment is right, has potential and is safe. The Malta property purchase process has inherent in it safeguards aimed at providing certainty and peace of mind. 
These safeguards can be mainly classified under two types: those involving checks to be undertaken during the actual process of purchase on the one hand, and warranties and guarantees provided at law, on the other.

Malta Property Purchase – Due Diligence and Searches

The practice is such that the seller and the buyer enter into a promise of sale agreement wherein the seller promises to sell and the purchaser promises to buy a particular property at a specified price within a time-frame.   Such agreement is usually conditional to the undertaking of searches into the title of the property on behalf of the purchaser and to such searches being in order.   

Malta Property Purchase – Warranties and Guarantees at law 

Duty of disclosure and good faith

The Malta Civil Code provides that contracts must be carried out in good faith, and shall be binding not only in regard to the matter therein expressed, but also in regard to any consequence which, by equity, custom, or law, is incidental to the obligation, according to its nature. 
In the context of a sale and purchase of property, parties to a contract therefore, when acting in good faith have the obligation to disclose to the other party all the information that might be material and affecting the object of the contract and the right of contractual benefit of the other party.  Acting in bad faith and not disclosing material information may result in breach of contract and an action in damages by the other party.

Warranty of quiet possession of the property sold

The seller is at law bound to warrant the buyer against any eviction which deprives the buyer, in whole or in part, of the property sold, and against any easements or burdens on the same, claimed by others, and not stated in the final deed of sale. This warranty applies even if it is not provided for in the deed of sale. However, the parties, by special agreement can add to, diminish or completely exclude such warranty.  
On the final deed of sale, it is customary that the seller, whilst warranting peaceful possession and good title to the property, constitutes in favour of the purchaser a general hypothec on his/her property present and future by way of guarantee.

Warranty in respect of latent defects

Whilst the seller is not answerable to any apparent defects on the basis that the buyer should have undertaken the necessary checks and care before purchase of the property, the seller is bound to warrant the property sold against any latent defects, which either render the property unfit for the use for which it is intended, or which diminish its value to such an extent that the buyer would not have bought it or would have tendered a smaller price, if s/he had been aware of the defects.  The seller is liable for the latent defects even if such defects were not known to him.  This warranty can be excluded by agreement. 

Other warranties

In the final deed of sale it is customary that the seller warrants that the property is built according to law and relative permits and that all road and drainage contributions have been paid.   

Legal guarantee for possession of the property in good faith 

The Malta Civil Code, in relation to the institute of prescription, provides that a person in good faith and under a title capable of transferring ownership, possessing an immovable property for a period of ten years, acquires the ownership thereof.  Consequently, in cases where the title transferred to a good faith buyer is defective, on the ten-year benchmark, the buyer becomes the owner of the immovable property thereof.  The Land Registration Act in addition provides that the registrar shall convert an unguaranteed title into a guaranteed one on the lapse of ten years from first registration.  

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