The conveyance of property in Cyprus
When buying property in Cyprus, lawyers representing the vendor and the
buyer carry out the legal work required, which is known as
conveyancing. The process is fairly complicated and involves
unravelling the legal jargon found in the Title Deeds, checking the background
of the property, and various title searches.
The process culminates in completion (in Scotland settlement); the transfer of ownership of the property from the vendor to the buyer. In Cyprus, completion occurs when the Title Deed to the property is issued in the buyers name.
In Cyprus, it makes no difference whether you're buying a plot of land, a resale property or a new property off plan from a property developer, the conveyancing process is identical.
The conveyancing process
The process starts after an offer has been made and accepted for a property and lawyers’ details have been exchanged. Both parties must be legally able to sell or transfer the property before the conveyancing process begins. The vendor’s lawyer will draw up a contract of sale. As a buyer, your lawyer will review the contract of sale and make various enquiries on your behalf to protect your interests.
One of the first things your lawyer needs to do is carry out a Title Search at the District Land's Office. The point of this search is to establish whether the property you are thinking of buying is owned by the person trying to sell it and that there is not a mortgage or any other claims lodged against it. (You can read more about how these claims work in Cyprus in my 'Property Claims' and 'Specific Performance' pages).
If your lawyer finds that the property is mortgaged, he should ask the vendor to provide a “release” from the financing company or bank stating that the property you are buying is released from the mortgage. If the vendor is unwilling or unable to obtain a “release”, your lawyer may advise you not to proceed with the purchase.
The potential consequences of buying a property that is burdened by a mortgage in Cyprus, or anywhere else for that matter, are disastrous; you risk losing everything.
Plan search
You may also ask your lawyer to arrange for a surveyor carry out a Plan Search at the District Administration Office. This establishes whether there are any developments in the pipeline near the area in which you're buying. Unlike the UK, getting a formal written statement from the planning authority is not possible. The best that can be expected is an informal, non-binding, off-the-record comment from one of the officers. A lawyer will be able to advise buyers about the zoning of the area, the building capacity and density, but not if a neighbour has applied for permission to start up a pig farm! And as the zoning may change, a lawyer would not be able to offer guarantees on this aspect of a purchase.
Please don't make the mistake of taking the developer at his word when he says he has no intention of building next door to you - get your lawyer to check it out.
Planning permission & building permit
Ask your lawyer to check with the authorities that Planning Permission & Building Permits have been issued for the property you’re thinking of buying. Your lawyer will probably arrange for a surveyor to carry out this task. Building without the required Permissions & Permits is illegal in Cyprus - so make sure that your lawyer checks that they've been issued.
Contract
Your conveyancing lawyer will review and possibly amend the contract of sale provided by the vendor's lawyer to ensure your interests are safeguarded.
Once your lawyer is completed their work on your contract, you should be given the opportunity to review it & discuss it with him/her. If there is anything you don't understand, now is the time to ask.
Some of the 'standard' contracts used by Cyprus property developers are very biased in their favour leaving the buyer with very little, if any, protection.
Once you are satisfied with the contract you need to sign it. Be aware that once you have signed a contract that's it - there's no contract cooling off period allowing you time to rethink your decision.
Once all parties have signed the contact, four copies are made and stamped at the District Lands' Office. One of these copies is stamped 'original' and will usually be kept by your lawyer. The remaining copies are stamped, with a Revenue Stamp and certified as being true copies of the original.
Stamp Duty
Your lawyer will ask you to pay an amount of Stamp Duty. This is payable by you when you sign the contract - the rates are as follows:
€ 1.50 per thousand for purchase prices up to € 170,860 and
€ 2.00 per thousand for the part of the purchase price exceeding € 170,860
So for a property costing € 256,290 the Stamp Duty payable by you is € 427.15.
Deposit contract of sale
Your lawyer needs to deposit one copy of the contract of sale at the District Lands' Office for what is known as 'Specific Performance'. This is a vital stage in the property conveyancing process that I discuss in the Specific Performance page.
Taking possession of the property
Once the obligations of the seller and buyer, as stated in the contract of sale, have been fulfilled, you may take possession of the property.
Be aware that although you may have paid for the property in full you do not own it until 'completion'.
Completion
Completion is defined as “When the sale and purchase of the property are finalised, and you become the legal owner of the house or flat”.
In the UK, the solicitors acting for the vendor and buyer agree a completion date & advise their clients accordingly. Usually it’s within a couple of weeks of exchanging contracts.
Unfortunately, completion in Cyprus can take years or even decades. I personally know several people who have been waiting more than 20 years to complete on their purchase and the average wait seems to be around 5 years.
Completion cannot take place until the Title Deed for the property is available. And to put it bluntly, the time it taken to issue Title Deeds is totally unacceptable.
The administrative problems of issuing Title Deeds are compounded by the fact that there are no 'incentives' for developers (and others) to progress matters. Indeed, it's often in the developers' financial interests to delay matters for as long as possible!
You can, if you choose, pursue the Land Registry through the Ombudswoman and the property developer though the Court.
During my CyBC radio discussion with MP Rikkos Erotokritou, he said “the House of Representatives are worrying a lot about the situation”. (Click here to listen to the podcast). I hope that means the Government be doing something about it!
To give you some idea of the scope of the problem, it’s been estimated that 1,000s of people are waiting for their Title Deeds and other estimates put the loss revenue to Government at some € 68,000,000!
The completion process
The transfer of ownership from vendor to buyer is carried out by staff at the District Lands’ Office, who they need the following information:
A completed Form N270 - ‘Declaration of Transfer of Immovable Property’.
The relevant Title Deed being transferred.
A completed Form N313.
A certified copy of the Council of Ministers’ permission to acquire the property or a Certificate of Permanent Residence issued by the District Administration Office (where appropriate).
Receipts confirming that the following have been paid:
Immovable Property Tax
Immovable Property (Town) Tax.
Capital gains tax.
Estate Duty Tax.
Sewerage Board Tax.
Town rate & Communal rate.
People usually give their lawyer power of attorney to attend the District Lands' Office and facilitate completion on their behalf.
At completion, you are required to pay Transfer Fees and in return, the District Lands’ Office issues a Title Deed bearing your name as the property’s legal, registered owner. At the time of writing, the fees are as follows:
3% - on the first € 85,430
5% - on the next € 85,430
8% - on the remainder
So for a home costing € 200,000, the Transfer Fees would be € 9,165.60; for a home costing € 400,000, the Transfer Fees would be € 25,165.60.
If your Contract of Sale is in joint names (e.g. a husband and wife), the lower rates are granted to both parties, i.e.:
3% - on the first € 170,860
5% - on the next € 170,860
8% - on the remainder
As a result, the Property Transfer Fees for a home costing € 200,000 in joint names would be € 7,457.
In the words of Professor Dr. Andonis Vassiliades, Professor of Law, Criminology & Penal Justice and a Legal Consultant when talking about completion: “the end result is sure and satisfying. You leave the Land Registry Office knowing full well that the property is now yours. You own that property!”
Open that bottle of champagne - time to celebrate!
Note: The Land Registry Office uses the market value of the property at the date of your agreement to calculate the Property Transfer Fee; this may or may not be the same as the price you paid for it.
If the Director of the Department of Lands & Surveys considers that the price you paid was below the property’s market value at the date of the agreement, he will determine the market value on which the fees are payable.
Once you have paid the transfer fees, you may apply to the Supreme Court to contest the Director’s decision.