Cancelling a Contract of Sale

[geck0]

Dear Nigel,

My loan was sold by Alpha Bank to Sky CAC in 2021 (unbeknownst to me, until now). I've been negotiating to return the property. The developer has decided he wants to take the property back, flip it and sell it again. Sky CAC wants Euro 87,000 in settlement of the debt, which the developer said he will settle.
To do this, the developer has sent our lawyer a Cancellation Contract. It specifies clauses that in essence;

• Nullifies the Contract of Sale
• Removes the Contract of Sale from the Land Registry (where it was deposited for specific performance)

I would have thought that the Contract of Sale can be removed from the Land Registry, which removes the encumberance, allowing the property to transfer to the developer. I would not have thought that the Contract of Sale would need to be nullified at the same time.

The reason for not wishing to nullify the Contract of Sale is because I am able to write off the loss of the property as a CGT loss against future CGT gains. If the Contract of Sale is cancelled, this will nullify the CGT event of purchase as well. It means I've basically paid off a property for the developer to sell twice.
My Cypriot lawyer says this is the only process to get this done. Is this correct?

PS. We've exchanged emails several times, however I thought its best to share the knowledge wider. Thanks for your knowledge. I've disabled my ad-blocker for your site to give support.

[Pantheman]

Dear Nigel,

My loan was sold by Alpha Bank to Sky CAC in 2021 (unbeknownst to me, until now). I've been negotiating to return the property. The developer has decided he wants to take the property back, flip it and sell it again. Sky CAC wants Euro 87,000 in settlement of the debt, which the developer said he will settle.
To do this, the developer has sent our lawyer a Cancellation Contract. It specifies clauses that in essence;

• Nullifies the Contract of Sale
• Removes the Contract of Sale from the Land Registry (where it was deposited for specific performance)

I would have thought that the Contract of Sale can be removed from the Land Registry, which removes the encumberance, allowing the property to transfer to the developer. I would not have thought that the Contract of Sale would need to be nullified at the same time.

The reason for not wishing to nullify the Contract of Sale is because I am able to write off the loss of the property as a CGT loss against future CGT gains. If the Contract of Sale is cancelled, this will nullify the CGT event of purchase as well. It means I've basically paid off a property for the developer to sell twice.
My Cypriot lawyer says this is the only process to get this done. Is this correct?

PS. We've exchanged emails several times, however I thought its best to share the knowledge wider. Thanks for your knowledge. I've disabled my ad-blocker for your site to give support.

Hmm, so instead of giving it back, why not sell it yourself, pay the debt and keep any proceeds?? Or am I missing something here.

Additional, if the developer wants it, you can draw up an assignment contract , leaving the original in place and when the developer settles the debt, he can have it.

The days of cancelling the contract are over!!

[geck0]

Thanks for the response.
The issue is, we've already paid off over Euro 100,000.
The property, new was only Euro 125,000. The bank wants an additional Euro 87,000. So, the developer says he will pay it and resell the property. Property values are sitting around Euro 140,000, so he'll make some money off it. Basically, selling it twice.

Additionally, Communal fees arrears, IPT taxes, etc. If the developer decides to be awkward that he isn't getting the property, the charges could become quite high (I've seen it happen with other people).

I'm not familiar with assignment contracts, I'll look it up.

[Tasmaniandevil]

So, you’re ‘into’ this for €187000 and are willing to return the property to the developer. Furthermore, you are happy to absorb that loss on the basis that you can write it off as a CGT loss. I think that’s what you’re saying?

As Pan has suggested, why not try to sell the property yourself? If, as you say, its value is circa €140000 and you achieve that, you could pay Sky CAC and be left with €53000 (140k - 87k). Less some taxes no doubt.
Perhaps time is against you? Just a thought.

Good luck.