Cyprus Property Forum for Buyers, Sellers & Investors

Hello everyone.

I'm a newcomer to the forum, but have read as much as I can about the above mentioned topics before asking my question, so please forgive me if I inadvertently cover ground which has been dealt with many times before.

I own an apartment in Peyia which was built by Aristo. Recently all owners received the demand for IPT, along with a two week deadline for payment and a threat of added interest if the deadline wasn't met. Needless to say, we all declined to comply, but ensured we did not actually refuse to meet our legal requirements. We simply asked for all the confirmations of payment of the tax by Aristo themselves, for certification of the amount applicable to our individual apartments and a proper invoice. We're pretty confident that Aristo haven't actually paid the tax yet. Predictably there has been no reply.

However, we have also now been informed that our long awaited Title Deeds have been released by the Land Registry and are currently with Aristo. I called the head office and received confirmation that this is, in fact, the case. I asked when they would be available to owners and was told that they had to go through 'clearance' before being issued and that the process would take around two months. I asked the obvious question, but could not gain a satisfactory explanation of what was meant by clearance.

So my question is twofold really;

Is this delay on the part of the developer normal, or indeed legal when the deeds have been released to them, and what does 'clearance' actually mean?

Can the deeds be withheld until IPT has been paid, even if the developer hasn't paid it to the Revenue and hasn't provided any certification relating to payment?

If anyone has information or advice in relation to these issues I'd be truly grateful.

Many thanks.

Hi stubbin and welcome to the forum.

Your property developer owns the property until such time as its Title Deed has been issued and registered in your name.

When the deeds are issued, they will bear Aristo's name as the property's registered owner - and any outstanding Immovable Property Tax, Capital Gains Tax plus any charges that may be lodged against the property (such as a mortgage) have to be repaid and various clearance certificates issued to 'release' the property from any charges.

I suspect this is what getting 'clearance' means, but I cannot be sure.

There is also the possibility that if the developer cannot clear the mortgage he may be negotiating with the bank to move it on to unsold properties in his portfolio. Similarly he could be negotiating with the Inland Revenue regarding payment of the company's tax liabilities.

There is nothing 'illegal' in what the company's doing.

If the deeds have been released I suggest you visit the Land Registry with your Contract of Sale and some ID (passport of yellow slip). They may be able to advise you of the apartment's 1980 value, which will be the basis on which your Immovable Property Tax liability since you purchased the property will be calculated approximately. I say approximately as the 1980 value of the property will have been submitted by the company on its annual IPT return to the Inland Revenue and the 1980 assessment of the property's value by the the Land Registry may be slightly different.

Regards,

Hello Nigel and thanks for your very helpful reply. I'll certainly go into the registry with the documents you suggest and try to clarify the 1980 value.

One other point, which I know is really for the Inland Revenue, but I'd be grateful to hear from anyone who may have had similar experiences.

If the title deeds can be issued upon payment of outstanding IPT, is it then my responsibility to pay that tax, or Aristo's as the registered owner? I know I have to pay eventually and have no problem in doing so, I'm just afraid that Aristo may withhold the deeds until I pay them the money I'm sure they haven't paid themselves, including penalty charges they will certainly have incurred. At present, all owners on our development are saying to Aristo that we will pay, but only when we receive certification that Aristo has actually paid the tax, receive a proper invoice, rather than a threatening letter and have an apportionment for each individual property. We also want to be exempt from a portion of the penalty charges which should be entirely Aristo's responsibility.

Again, many thanks in anticipation from anyone who has experience of this situation.

Hi stubbin,

In virtually all the sales agreements I've seen, the buyers is responsible for paying Immovable Property Tax from the date they take delivery of a property. A typical clause may look like:

“As from the day the Purchaser has been in possession of the said property, the Purchaser undertakes to be responsible for and to pay all Government and local authorities taxes, levies, duties or charges raised on or in connection with the property hereby sold, and in the event that the Vendor pays them then the Purchaser hereby undertakes to reimburse the Vendor accordingly. The tax payable under the provisions of Laws 24/80-I987 shall be the responsibility of the Purchaser provided always that the Vendor will submit to the Purchaser the relevant documents for the purpose to apply for refund of such payments for this special tax.”

or

“From the date of delivery of the Property to the Purchasers, the Purchasers shall be obliged to pay all taxes or rates corresponding to the Property in proportion to the whole project during the period prior to the registration of the Property in the name of the Purchasers.”

So you'll need to check your sale agreement to see what it says.

Obviously you cannot pay until you know how much you need to pay - and this is calculated by the developer after he has received the bill and paid - as he can then work the amount you have to reimburse him corresponding to the property you purchased in proportion to the whole project.

If your contract obliges you to pay then Aristo can hold back on the transfer of the deeds until you've settled the bill.

Penalty charges arise when a registered owner fails to pay the tax by the due date - or fails/is late in submitting a return. These should not be passed onto you as it's not your fault the company cannot run its business correctly.

I've seen quite a number of these letters that infer that the recipient is the owner of the property. This is misleading - you only own the property on payment of the Property Transfer Fees at which time its title is registered in your name.

As for any penalty payments the developer may try to impose on you, you'll need to check your sales agreement. All of the agreements I've seen impose penalties if you are late making stage payments, but I've seen none that impose penalties for late payment of tax.

Once the deeds are registered in your name, you will pay any Immovable Property Tax due from the year of registration - and you will pay these directly to the Inland Revenue Department.

Regards,

Hi Nigel.

Once again, many thanks for your very helpful reply.

Regards.