Lawyer and Developers Fees

Does the developer want to charge you for selling your property?
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cmcmac
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Lawyer and Developers Fees

Post by cmcmac » 29 Feb 2012 21:01

I have managed to secure a local buyer for my apartment at an incredible loss. I have received a cancellation fee of 6138.00 Euros from my developer which they have kindly dropped to 3000.00 Euros. I had asked my lawyer about not going through the developer under the new laws however this was their reply,

Cancellation fee is charged by the developer to enable the signing of a new contract with the new purchaser. We have asked the developer to provide us with their statement of account and also cancellation fees. This is usually approximate to the amount that you would have paid as lands registry fees. Capital gains tax is zero. Other dues and expenses relate to the utilities and stamp duty on the legalisaiton of the cancellation agreement, and the agents commission fees.

In relation to the issue that you raise about vesting contracts, this is to inform you that since the adoption of the new law, the Deeds of Assignment are now recognised as a valid exercise of a right to sell by way of assignment. What this article does not inform you is that you remain tight up to the property up and until separate title deeds are issued and you will be liable and responsible to pay lands registry fees at a future time when the separate title deeds are issued. Your purchaser will also have to pay lands registry fees.

The advantage of proceeding through the cancellation agreement and the developer is that you no longer have any connection with the property, the property is sold on and therefore it is an issue then between the developer and the new purchaser as to when separate title deeds will be issued. Additionally you will not be called to pay lands registry fees.


Although I just want to pay this and be done with it all the lawyer has also now sent an estimated bill for their work which totals 4000.00 Euros and would just like some advice as to whether or not I am being completely ripped off.

I look forward to your reply.
Regards



JaneDoe
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Re: Lawyer and Developers Fees

Post by JaneDoe » 01 Mar 2012 07:36

cmcmac wrote:What this article does not inform you is that you remain tight up to the property up and until separate title deeds are issued and you will be liable and responsible to pay lands registry fees at a future time when the separate title deeds are issued.
Cmcmac, you many need to confirm this. Surely the new law is not a perfect law. Could you assign also the obligation to pay land registry fees? If not, are the land registry fees more than the cancellation fees?



Nigel Howarth
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Re: Lawyer and Developers Fees

Post by Nigel Howarth » 01 Mar 2012 17:23

cmcmac wrote:In relation to the issue that you raise about vesting contracts, this is to inform you that since the adoption of the new law, the Deeds of Assignment are now recognised as a valid exercise of a right to sell by way of assignment. What this article does not inform you is that you remain tight up to the property up and until separate title deeds are issued and you will be liable and responsible to pay lands registry fees at a future time when the separate title deeds are issued. Your purchaser will also have to pay lands registry fees.
I thought there may be a problem with having to pay Property Transfer Fees twice with these 'vesting'/'assignment' contracts and I spoke with a lawyer about the possible implications. Apparently the law is 'silent' on this issue (i.e. it is not mentioned) and in his opinion, Transfer Fees would only have to be paid once (by the second purchaser) as the property is only transferred once.

Using a 'vesting'/'assignment' contract enables you to assign your rights and obligations to a third party. One of those obligations is to pay the Property Transfer Fees. (So even if this lawyer's opinion was incorrect, it would be your buyer's responsibility to pay the Property Transfer Fees that you were originally obliged to pay).

I am aware that different lawyers have different opinions and it will be 'interesting' to see how the Land Registry interprets the law at the completion of a sale involving a vesting contract.

Regards,


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Re: Lawyer and Developers Fees

Post by Nigel Howarth » 08 Mar 2012 11:41

Hi cmcmac,

I asked a lawyer to check out the situation regarding Property Transfer Fees and I'm afraid that your lawyer has been speaking through an orifice normally reserved for another purpose - and in my opinion he has ripped you off!

Here is what the lawyer had to say:
  • "We have checked this out for you (and for ourselves!)

    Top dog at the land registry has confirmed that the transfer will be made directly in the name of the assignees. It has also been confirmed that the transfer fees only get paid once by the assignees i.e when the actual transfer is made.

    It's a good procedure and avoids the payment of cancellation charges and we have already put a few through without any difficulties."
I suggest that you complain to the Cyprus Bar Association on the grounds of 'Inadequate Professional Services'. You can find more information on how to go about this on the Bar Association's website at http://www.cyprusbarassociation.org/cms ... page_id=29

It's about time the Bar Association came down hard on these wretched blood-suckers; they are getting the legal profession a very bad name, which is doing nothing to improve the Island's tarnished reputation!!!

Regards,


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Pantheman
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Re: Lawyer and Developers Fees

Post by Pantheman » 08 Mar 2012 23:39

Is it fair to assume that this method can only be executed if the original seller and new buyer do not involve the bank?
Ie, no mortgage on property and no loan required.
Because the way I see it, if h banks wer involved I doub very much his system could be carried out.
Any opinions Nigel?

Regards
Pan


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Re: Lawyer and Developers Fees

Post by Nigel Howarth » 09 Mar 2012 10:17

Hi Pan,

The banks can be involved. If the original buyer has a mortgage, the new buyer can repay that and then pay the original buyer the difference. E.g. Property being sold for €250,000 and original buyer has an outstanding mortgage of €100,000. The new buyer can pay €100,000 to mortgage lender and €150,000 to the original buyer.

I am not sure how it works if the new buyer needs a mortgage.

Regards,


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Pantheman
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Re: Lawyer and Developers Fees

Post by Pantheman » 09 Mar 2012 15:12

Nigel Howarth wrote:Hi Pan,

The banks can be involved. If the original buyer has a mortgage, the new buyer can repay that and then pay the original buyer the difference. E.g. Property being sold for €250,000 and original buyer has an outstanding mortgage of €100,000. The new buyer can pay €100,000 to mortgage lender and €150,000 to the original buyer.

I am not sure how it works if the new buyer needs a mortgage.

Regards,
Sure, but we are saying that only a cash buyer can use this method. Since any mortgage requirement will definately need the developer.


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Re: Lawyer and Developers Fees

Post by Nigel Howarth » 09 Mar 2012 17:02

Pantheman wrote:any mortgage requirement will definitely need the developer.
Yes - the developer will need to act as the guarantor. I'll speak with a lawyer about this - I know one who has prepared a number of these 'vesting'/'assignment' contracts.

As I understand things (and I may be wrong) is that the only reason the developer has to act as a guarantor is so that the bank can recover the property if the mortgage borrower defaults - as it gives the bank first claim on a property. So possibly the bank could transfer the developer's guarantee to the new buyer?

This whole situation could be avoided if Title Deeds were available at the time a property was delivered - it would make things easier for everyone (apart from the developers perhaps).

(I was speaking with a lawyer in the UK a couple of days ago - you cannot get a mortgage to buy a property there unless the property has a Title Deed).

Regards,


Nigel Howarth
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Pantheman
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Re: Lawyer and Developers Fees

Post by Pantheman » 09 Mar 2012 17:16

Nigel Howarth wrote:
Pantheman wrote:any mortgage requirement will definitely need the developer.
Yes - the developer will need to act as the guarantor. I'll speak with a lawyer about this - I know one who has prepared a number of these 'vesting'/'assignment' contracts.

As I understand things (and I may be wrong) is that the only reason the developer has to act as a guarantor is so that the bank can recover the property if the mortgage borrower defaults - as it gives the bank first claim on a property. So possibly the bank could transfer the developer's guarantee to the new buyer?

This whole situation could be avoided if Title Deeds were available at the time a property was delivered - it would make things easier for everyone (apart from the developers perhaps).

(I was speaking with a lawyer in the UK a couple of days ago - you cannot get a mortgage to buy a property there unless the property has a Title Deed).

Regards,
Nigel, the way I underdstand it is, that the developer is NOT guarantor, but has to assign the land portion rights to the bank, so they can use it as security. This is different to be a guarantor.

Bottom line, you need a cash buyer to utilise the vesting/assigning method.


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