"IPT" Payments to developers.

[Pete G]

Firstly Nigel, thanks for all of your advice, both here and on your site, it's all been very useful.

I was one of those people who were so keen to buy their property [a two bedroom apartment on a large development, well within the IPT exemption zone]that I signed a contract to say I would pay the IPT for the developer, on the basis that I could claim any overpayment back [yes, I know].

I was told by my developer that they "did not" send out invoices for the IPT and the common area maintenance [which they were still responsible for at the time] but if I popped into the office they would helpfully tell me how much I owed them, and I could pay.

Being extremely naive of the ways of Cypriot developers, I accepted this until I looked at the charges in the light of other information, especially your website and decided that even at the highest rate of IPT [which is what I presumed the developer would be paying] the IPT asked for was way to high.

I wrote to the developer, outlining my concerns and saying that, whilst I was quite prepared to meet my contractual obligations to them regarding IPT, I would not be doing so until they provided the relevant evidence and sent me a proper bill, on headed notepaper of a proper invoice document [just as you suggested in fact] I have not heard from them since.

I am now a little concerned, because I am told that the title deeds are almost ready for collection, and that the developer will soon be calling upon us to go with their representative to the Land Registry, where upon payment of the "reasonable" admin fee they will sign off on the transfer, and I will get my deeds.

I'm kind of assuming that this is the point at which he will say, "Your IPT debt is whatever I say it is, and you don't get your deeds until you pay, plus interest"

Even I am not naive enough to believe that the "vagaries" [to save you from a lawsuit] of the Cypriot legal system will protect me from this sort of practice, even though I have stuck to the rules.

Is there any real prospect of me actually getting my title deeds by only paying what I actually owe the developer [legally], or are my choices simply to pay whatever they demand and smile, or not get my deeds [at which point the land registry start pursuing me because they want the transfer tax, presumably]

Has anyone actually successfully only paid the developer what they owed rather than what was demanded, and actually got their deeds? I'd be interested to know how you did it!

I also heard a rumour that the Land Registry are just about to change their practices, and if I can just hold on for a while, I can treat directly with the Land Registry without requiring the permission/intervention of the developer, pay my transfer tax and get my deeds. Ring a bell with anyone?

[Nigel Howarth]

Hi Pete,

If the developer does try to overcharge you for IPT and 'administration expenses', you'll be between a rock and a hard place:

If you go to the Police they will say that it's a civil matter (I never knew extortion was civil matter!), so it will be to you to take action against the developer.

And if you do take action yourself, your legal fees will most probably be more than the developer is demanding.

You could present the developer with this letter from the Interior Ministry and hope that he complies.

(I have not heard about the Land Registry changing their practices, but something has to be done if the government is going to reduce the 130,000 Title Deed issuance backlog by Q4 2014 as it has agreed with the troika).

Regards,

[Pete G]

Here are a couple of whacky ideas I have been toying with

a) Refusing to pay and complain that the Government mandated instructions for claiming the IPT have not been followed to the Cypriot Consumer Protection Service [if they are not actually a part of the problem]. That way it will be the developer that is holding up the transfer, not me.

b) Although I know the contract has to be handled under Cypriot law [although, to be fair the contract is in English and doesn't specify jurisdiction], the extortion is clearly a separate offence, and might be persuable in an English Court.

Do you think either of these avenues actually stand a chance of getting the developer to restrict the amount of money he wants for his signature to the amount he is actually entitled to?

I also understand he wants a 300 euro "admin fee" for his signature, maybe I should send him a bill for mine? :)

TBH I'm not desperate to sell, and I've only waited just under seven years for my title deeds, which seems a positive express service compared to some other people I know, so waiting a while longer [the developer is a big one, and is not in any immediate danger of going out of business as far as I know], is a risk I'm prepared to take in an attempt to contain the attempt to rip me off to reasonable proportions

[Nigel Howarth]

CPAG obtained legal opinion on the subject of Immovable Property Tax - you can read the article at http://www.news.cyprus-property-buyers. ... s/id=00517

You will note that it says: “the purchaser may ask the developer to provide him with evidence on the IPT he paid for the property (land) upon which the purchased property has been erected and pay the share of this property to the IPT paid for such. In other words the purchaser may refuse to pay more than what he will be entitled to recover from the Inland Revenue, without committing breach of his agreement.“

So to answer to your first question, you cannot refuse to pay, but you can say that you are only prepared to pay once the developer has provided you with the necessary information.

And there is nothing preventing you from complaining to the Cyprus Competition and Consumer Protection Service (but based on the experience of others regarding property matters the CCPS is about as much use as a third eyebrow - and if you read my Cyprus Property News, the EC has opened infringement proceedings against Cyprus for a matter dealt with by the CCPS).

On the second question, if you signed the agreement in the UK, you could take it to the UK court - but I expect jurisdiction will be challenged. The jurisdiction issue in a separate case went to the High Court in London last year and the plaintiffs secured a judgement in their favour (I hope you have deep pockets).

Regards,

[footy123]

Hello Pete

There seems to be a huge difference in ethics and morals here in Cyprus from developer to developer.We bought an apartment here in 2004,we now have our title deeds and have not had an ounce of problems with our developer.Except for what we thought (and only thought) was a little over charging when aquiring our deeds.Also a member of our family has had the same pleaseant experience.
Anyway,sympathise with your plight and hope the outcome is what you wish.

Terry Liversidge

[Pete G]

Thanks for the advice [Nigel] and the good wishes [Terry]

You are quite correct, there is a continuum of developer rapaciousness, and TBH ours has been better than most in the main, they just seem to have a thing about charges, on the actual building side and the old "not taking out a mortgage on property they don't own" they have actually been quite reasonable.

Sorry if I confused you Nigel, I actually meant "not paying until I get a bill I recognize the amounts on" rather than a just "not paying" [in line with the info they are obliged to provide as the info on your website]. I also intend to "resist" any late payment charges on money they had never actually asked me for. Call me a fool :)

I did actually, briefly, consider working out the IPT and just sending the developer that amount, but I sort of figured that they would just say "thank you very much" and still not sign off, so I abandoned that as a strategy.

And I was actually referring to jurisdiction on the "tort" [demanding money under false pretenses, a fraud essentially] rather than the contract issue, thought it might be worth a punt, it should fall well under the "Small Claims" parameter and therefore shouldn't be too much of a burden, at least to kick off

[briano]

Hi Nigel
I purchased my apartment at the end of 2008 and last June 2012 I got a bill for IPT from the developer for back payment of 78 euro per year from 2009 to 2011 which I paid. The 1980 value on my property was quoted at 19500 euro. In December 2012 I received my IPT bill for 2012 which had gone up to 156 euro which I also paid. I have now received an IPT bill for 608.40 euros therefore valueing my apartment in 1980 at 86000 euro according to my calculations. Surely this cannot be correct. I have phoned the developer and they are stating that it is due to the Troica but that they are looking into the cost and may get it reduced a little bit. This is daylight robbery in my opinion. I was wondering do you have any advice on this.
Regards
Briano

[Nigel Howarth]

Hi Briano

IPT rates have increased in recent years. Assuming your developer was paying at the top rate, the charges would have been as follows, based on the 1980 value of the apartment:

2008 - 2011 - 0.4%
2012 - 0.8%
2013 - 1.9%

From your earlier posting I see that the Title Deeds are being prepared - and I suspect that the Land Registry may have calculated the 1980 value (which I make €32,021 based on the €608.40 that you have been asked to pay).

In previous years (2008 - 2012) the developer will have submitted an IP tax return to the Inland Revenue and they would have calculated the tax due. This will have been based on the 1980 value of the land on which he was building PLUS the 1980 cost of 'improvements' (such as the building) the developer made in each of the years.

The 1980 value of the land plus the 1980 costs of the improvements may be less than the 1980 value of the property as assessed by the Land Registry - and this may account for the difference.

But you will be able to reclaim any legitimate overpayment of tax from the Inland Revenue Department once the deeds have been issued and the property has been registered in your name. (You can read more about this on my website at http://www.cyprus-property-buyers.com/law/tax.htm ).

Regards,

[briano]

Thanks Nigel I appreciate your prompt response and I did not realise that the percentage rate had increased so much.

Regards
Briano