Certificate of Approval

Have you bought 'off-plan' and having problems?
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slwright
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Certificate of Approval

Post by slwright » 11 Feb 2008 20:20

Hello Nigel,

I wonder if you could clear something up for me. We are buying a property off-plan due for completion January 2009 in Paphos. As its illegal to occupy a property that does not have final completion certificate should we be holding off paying the final payment until the developer has this certificate, and if we did hold off paying the last payment would we technically be in default of the Contract. Our contract says "Possession of the property passes on to the Purchaser on the date of the completion which time is agreed to be 11/01/2009 provided that the Purchaer has complied as at that date with all the Purchaser's obligations under this contract".Is it usual for a developer to apply for this certificate before the due completion date? I had heard that sometimes the inspection of the Town Planning Department and approval can take months to be issued, is this correct? I have written to my lawyer with at least 20 questions all taken from reading the law section of your website and reading into things and they have emailed me back saying they will be in touch with me in a few days time!!!! as they are on a huge court case at the moment but assure me they will get back to me.

I hope you don't mind me asking the above but I would suspect this is a question that most people should be interested in.

All the best
Sheila



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Re: Certificate of Approval

Post by Nigel Howarth » 11 Feb 2008 22:03

slwright wrote:Our contract says "Possession of the property passes on to the Purchaser on the date of the completion which time is agreed to be 11/01/2009 provided that the Purchaer has complied as at that date with all the Purchaser's obligations under this contract".
If you withold payment, I'm afraid you may be in breach of contract - but you need to look at the payment schedule to see what it says.

Developers cannot apply for the Final Completion Certificate until they've completed the work covered by the Planning & Building permits. So on a development comprising a number of properties, different properties are delivered to customers on different dates, so it's extremely unlikely that a developer will have applied for the inspection when you take delivery.

And by the time that the developer does apply for the Certificate, some people may have been living in the properties for a number of years. During that time, they may have built a garage, added a swimming pool, etc. So when the Inspector calls, the development doesn't get a tick in the box because it no longer complies with the permits issued for its construction.

It's often the case that developers deviate from their original plans. If they do this, they have to submit a revised application and get what are kown as 'cover' permits. And these can take as long to process as the original applications in some cases.

One other thing I should point out. In the UK, Completion cannot take place until the Title Deed for the property you're buying become available and any mortgages and other claims against it have been removed. In Cyprus the term Completion is often used (as in your case) to describe something completely different; when you take delivery of the property. In Cyprus, what you and I think of as Completion can take many years.
slwright wrote:I had heard that sometimes the inspection of the Town Planning Department and approval can take months to be issued, is this correct?
No - it can take years, particularly in Paphos District which seems to be a law unto itself!

The whole system is in dire need of modernisation. (Some developments have been made - I was in the Limassol Lands' Office a few weeks ago to get copies of my Tite Deeds and Cadastral Plans. I was in and out of the place in half an hour).

The main complaint I get about lawyers in Cyprus is that they are appallingly bad at replying to emails, phone calls and letters. The're absolutely hopeless! But keep on trying, they'll get back to you (or your grand children) eventually.


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slwright
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Re: Certificate of Approval

Post by slwright » 12 Feb 2008 02:08

Hello again Nigel :D ,

Thank you for your reply so quickly. It kind of makes a mockery of it all doesn't it. If its illegal to occupy a property without the certificate of approval and this takes months to be issued then everyone is breaking the Law . Its a no win situation really. Unbelievable. When I was told that Cypriot Law was based on British Law I took comfort in that and put my trust in my Cypriot lawyer to inform me as would a solicitor here on the Contract. Everything seems to be back to front and exchanges on Contracts are done so quickly in Cyprus as opposed to here. I will never again moan when buying a house here and it takes six months for the legal process, at least you know everything is being done to protect you and your property. We are paying in quarterly stage payments and our last payment is due on or before 11 January 2009, I guess we will have no choice but to pay up once the snagging list has been and hope for the best :roll: .

All the best to you and thank you for your comments and advice.
Sheila



clive of payia
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Re: Certificate of Approval

Post by clive of payia » 12 Feb 2008 11:19

Sheila,

As Nigel will confirm, you cannot obtain title deeds until a Completion Certificate is issued or unless the developers can give you the official number of the Completion Certificate.

Through this and other similar sites buyers are becoming much more aware of the trials and tribulations of buying off-plan and are now taking whatever measures they can to protect themselves until they receive either a completion certificate and then title deeds.

Some are asking developers to arrange for purchasers to receive the title deeds to the land only. A Completion certificate is not required, Nigel will correct me if I am wrong, for the land only part of the title deeds. Title Deeds are, or used to be, issued in two parts, one for the land and the other part for the building(s). At least if you have title deed to the land you have something. Or, what others are now doing is requesting a legally binding document that the developer signs that clearly states that you, with your name(s) on it, are the 'beneficial' owner(s) of the land for which you will have title when the completion certificate and title deeds are issued. It should also contain a clause which sets a price for the developer to realease you from your contract should you wish to sell before title is issued. Another method being explored especially those living in apartment blocks awaiting title deeds is to be given a legall-binding share certificate for the land, i.e. if there are 10 apartments in the block, you have a 10 percent registered ownership in the land.

Many developers would not accept the any of the above, but if more people keep pushing for it things may change.

The answer of course is to buy the land first and then build on it or buy a re-sale with title deeds.

I'm not a developer, lawyer or even expert in the building industry. Just been living in Cyprus for six years and seen and heard so many problems buying property out here.

Good luck,

Clive of Payia



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Re: Certificate of Approval

Post by Nigel Howarth » 12 Feb 2008 11:36

Hello Sheila,

If the situation wasn't so serious, it would be laughable - you would think the plot was written by Gilbert & Sullivan - or perhaps the Ealing Comedy writers.

But it's a system that we have to work with. And to say it's based on British Law is I bit like saying I'm related to Adam and you're related to Eve.

Things will have to change. I understand that the number of Brits buying property here has gone down by 20% - perhaps that will kick the Government into some sort of action.

Regards,


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slwright
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Re: Certificate of Approval

Post by slwright » 12 Feb 2008 16:02

Thank you Nigel and Clive for your imput and detailed information.

It is difficult not to get frustrated over all the law issues that Cyprus has. You are right Clive/Nigel themore people demand a better system the more likely it is that the Cypriot Govern will sit up and listen and think "hey were losing a lot of revenue here, must do something about it".

I was also thinking that it must be very frustrating for the lawyers who have trained in Britian and got their Law Degree here and then have to desipher the garbled mess that has been left behind.

All the best
Nice talking to you both.
Sheila



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Re: Certificate of Approval

Post by Nigel Howarth » 12 Feb 2008 23:41

Hi Clive,

It’s all a bit of nightmare isn’t it.

Unfortunately, if the property is part of a development, you cannot get the Title Deeds even though the Completion Certificate is available
. This is because the developer then has to apply for a Division Permit. Once that’s been given the thumbs-up he then needs to apply for a Certificate of Approval for the Division Permit – and once he has that, he can apply to the Land Registry for the registration of the property & issue of Title Deeds.

If the property isn’t part of a development and the land has been divided into building plots Title Deeds issued for the plot on which your house will be built, then you can get the Title Deed. (This is actually cheaper as you only pay the Property Transfer Fees based on the value of the land – unless the developer has already applied for the permits to build).

If you have the Title Deed for the land, once the property has been built (and issued with a Completion Certificate) the Land Registry updates the existing Title Deed to show that a property now occupies the land.

I’ve seen several contracts that refer to property buyers waiting for their Title Deeds a “Beneficial Owners” – this is another smoke & mirrors job. A beneficial owner is a person who, although he doesn’t have title to a property, enjoys the same rights as if he did. Clearly, in Cyprus this definitely not the case because:
  • They are unable to make changes to the property without seeking the agreement of its registered owner.

    Without Title Deeds buyers are unable to raise money against the property and are unable to access any of the capital tied up in the property through equity release loans and other schemes.

    As there are also problems in obtaining mortgages on resale properties without Title Deeds, anyone wishing to buy needs to have the ready cash.
The share title scheme that’s being looked into has the potential to make the situation even worse than it is today!
  • A share is not recognised by the Land Registry. So if you have a one-tenth share in a block of 10 apartments, you effectively ‘own’ one tenth of each and every apartment in the block. Similarly each of the other 9 share-holders has a one tenth share of yours.

    If one (or more) of the other ‘owners’ takes a mortgage on their one-tenth share, you effectively become liable for a one-tenth share of their mortgage.

    Furthermore, if one of those ‘owners’ fails to repay the mortgage and the bank applies to the court, the Court may sell/auction your property to recover the debt, even though it’s one of the other ‘owners’ who’s at fault.
The whole thing is a disaster in the making.

There's an obvious solution staring everyone in the face, but money talks and the developers certainly have a lot of that - and political clout. The processes by which Title Deeds are established and transferred to property buyers needs to be simplified and streamlined to enable the conveyance of freehold Title to be achieved immediately at completion of their purchase.

Some may consider the current practices to be in breach of Cyprus’ Constitution. In its opening paragraph, Article 23 of the Constitution of the Republic of Cyprus states that:
  • “Every person, alone or jointly with others, has the right to acquire, own, possess, enjoy or dispose of any movable or immovable property and has the right to respect for such right.”
Who do they think they're kidding?

Sorry Clive, it’s a very long posting, I feel a little better now.


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Pantheman
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Re: Certificate of Approval

Post by Pantheman » 21 Feb 2008 20:02

slwright wrote:Hello again Nigel :D ,

Thank you for your reply so quickly. It kind of makes a mockery of it all doesn't it. If its illegal to occupy a property without the certificate of approval and this takes months to be issued then everyone is breaking the Law . Its a no win situation really. Unbelievable. When I was told that Cypriot Law was based on British Law I took comfort in that and put my trust in my Cypriot lawyer to inform me as would a solicitor here on the Contract. Everything seems to be back to front and exchanges on Contracts are done so quickly in Cyprus as opposed to here. I will never again moan when buying a house here and it takes six months for the legal process, at least you know everything is being done to protect you and your property. We are paying in quarterly stage payments and our last payment is due on or before 11 January 2009, I guess we will have no choice but to pay up once the snagging list has been and hope for the best :roll: .

All the best to you and thank you for your comments and advice.
Sheila
Hello Sheila,

There isn't really anything to worry about. technically you are in breach of the law, but the chances of being prosecuted is next to zero.

Yes, I am aware that a recent case was being tested, but this is extreme and you, IMHO , are quite safe. As safe as the many thousands of other property buyers are at least.

Don't worry.


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Re: Certificate of Approval

Post by Nigel Howarth » 22 Feb 2008 12:11

Hi Pan,

I agree that Sheila is very unlikely to be prosecuted.

However, those buying property need to ensure they abide by the laws of the land (otherwise anarchy would reign).

IMHO, Article 10 of the Streets and Buildings Regulations Law, Cap. 96, provides a vital safeguard for buyers that the property they are buying conforms to the Planning & Building permits issued for it's construction. Unlike some other countries, it's the only independent inspection a property gets during the course of its construction.

E.g. What would happen if someone bought an apartment and their child fell off a balcony because the railings were too low - or if someone fell down the stairs because the stairwell was not lit? Who would be held responsible - the builder or the people who were occupying it illegally?

Cheers,


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Pantheman
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Re: Certificate of Approval

Post by Pantheman » 22 Feb 2008 14:51

Nigel Howarth wrote:Hi Pan,

I agree that Sheila is very unlikely to be prosecuted.

However, those buying property need to ensure they abide by the laws of the land (otherwise anarchy would reign).

IMHO, Article 10 of the Streets and Buildings Regulations Law, Cap. 96, provides a vital safeguard for buyers that the property they are buying conforms to the Planning & Building permits issued for it's construction. Unlike some other countries, it's the only independent inspection a property gets during the course of its construction.

E.g. What would happen if someone bought an apartment and their child fell off a balcony because the railings were too low - or if someone fell down the stairs because the stairwell was not lit? Who would be held responsible - the builder or the people who were occupying it illegally?

Cheers,
Nigel,

i do agree with you, but honestly, if the inspections actually made a difference I would have more respect, but I have seen stairs, too narrow to place ones foot, railings, that wobble and a few other screamers. Bet they get passed.

The laws here are with all good intentions and even it some think they are barmy, what is sad is that the laws are not always followed or are flouted, even by the very people who are supposed to up hold them.

I guess we still have a long way to go :roll:

Thanks


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Re: Certificate of Approval

Post by Nigel Howarth » 22 Feb 2008 22:14

Maybe I'll write to the next President asking him which laws we should keep and which ones we can ignore. :wink:

Cheers,


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