News • January 25 2004

Notaries who encourage clients not to sign konvenji

Julian Manduca
Some notaries have been advising their clients to ignore signing konvenji (promise of sale agreements) on the sale of property, MaltaToday has learnt. Prior to budget 2003, it was commonly known that following the signing of konvenji parties to a sale would often understate the agreed sales price on the final contract, especially where no bank loan was involved.
Lowering the price would mean less tax to be paid by the buyer and also the seller in the case were capital gains tax was applicable.
Government has tried to curtail the abuse by sending its architects to ensure that an acceptable price was paid, but many people still got away with the lower prices.

In budget 2003, government decided all konvenji have to be registered making it impossible to state lower prices on the final deeds.
Some wily Maltese notaries, in cahoots with their clients, have found a new way of beating the system and are encouraging clients to ignore the konvenju stage and, following the necessary research to establish ownership, sign a contract – obviously with a lower price. There would be nothing apparent against the law, as there is no legal obligation to sign konvenji, although each such contract would carry an illegal element, in that tax would have been evaded.
Notaries told MaltaToday that it was mostly big contractors that were attracted by such agreements.