Money retained by solicitors

[Clive]

My neighbour sold his apartment in Paralimni in October 2006 in order to purchase another property in Cyprus. The solicitors, based in Paralimni have retained CYP 3000 which they say will be returned to my neighbour once the title deeds have been issued to the purchasers of the apartment. The actual clause in the sale contract for the apartment states:

"Three thousand Cyprus Pounds (CYP 3000) will be retained by the Purchasers to be paid to the VENDORS when the Title Deeds are issued to the Purchasers"

In view of the negative comments made on this and other sites regarding solicitors, is this another 'CON'?

Thanks for your assistance.

Clive

[Nigel Howarth]

Hello Clive & welcome,

Nothing to worry about - this is quite normal practice. Your neighbours should have had a similar clause in their contract when they purchased the apartment originally.

Regards,

[Pantheman]

I for one totally disagree with this clause TBH.

lawyers are doing this to hoard clients money knowing that the title deeds will take some years to produce.

The property is bought as is, everyone knows the title deed situation and you buy on this basis.

I bet I can guess the said lawyer, begining with P........... of Paralimni

If it is the same, then he tried to retain cy£5k of my family members money for deeds. My family had the apartment for 10 years without deeds, it has been sold twice since with out deeds, this means someone is making money.

personally I would not sign a contract with such a clause, there are many properties to choose from.

personally, I think it is day light robbery!

IMHO

[Clive]

Hi Nigel and Pantherman,

Thanks for both your replies. What is still unclear is why the solicitors retain money in the first place. Surely on the resale of a property without deeds, a new contract of sale/purchase is lodged with the Land Registry to show the new owners and if and when the deeds are eventually issued it is the responsibility of the current owners to pay the transfer fee? Am I missing something?

Clive

[Nigel Howarth]

Hi Clive,

I must apologise - when I read your question I thought the CYP 3,000 was being retained by the vendors (not their lawyer).

The problem is that your neighbour does not own the property, because its Title Deed is not registered in his name. So what is probably happening is that his buyer is actually buying the property from its Title Deed holder - most probably the developer from whom it was bought originally.

When buying a property from a developer withholding money acts as an 'incentive' for the developer to progress the issuing of Title Deeds.

There are a number of ways that a property without Title Deeds may be sold:

1. The purchaser cancels their contract of sale with the vendor (the property developer) and has their contract of sale withdrawn from the Land Registry. This allows the property developer to enter into a contract of sale with the 'new' purchaser - and this contract is then lodged with the Land Registry.

2. A contract of sale is drawn up between the vendor and the purchaser (with the agreement of the property developer and the Land Registry) which is deposited at the Land Registry - the original contract is not withdrawn.

3. The vendor without Title Deeds assigns their rights to their contract of sale to their purchaser. So that when the Title Deed is issued eventually the property will be registered in the name of the 'new' purchaser.

In the first case, the 'new' purchaser pays the Property Transfer Fees based on the market value of the property when their contract was deposited at the Land Registry.

In the second case, both the 'old' purchaser and the 'new' purchaser pay Property Transfer Fees based on the market value of the property when their contracts were deposited at the Land Registry. This is because the property changes hands twice - once from the developer to the 'old' purchaser and for a second time when it's transferred from the 'old' purchaser to the 'new' purchaser.

I'm not sure what happens in the third case, because I don't know of anyone who's actually done this.

If Pan is correct in his assumption about lawyer 'P', I suspect he may have drawn up a contract as described in '2' above (because I've seen some examples of his contracts). I have to say that I'm surprised that the Land Registry lets him get away with this because it's illegal for someone to sell a property they don't own.

Going back to the CYP 3,000. This should have been held by the vendors or put into an interest bearing account managed by an independent escrow agent.

I hope that all makes sense.

Cheers,

[Clive]

Thanks Nigel for your explanation. Everything seems a lot clearer now.