Selling Charges

Does the developer want to charge you for selling your property?
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spottydog
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Joined: 22 May 2008 18:46

Selling Charges

Post by spottydog » 23 May 2008 15:07

Hi Louise / Nigel,
New to the forum but have already found postings of great interest and wondered if you could give us some advice.

We took delivery of our property in May 2004 and due to a change in circumstances now wish to sell, for reference the property was purchased in 4 names and purchase price was 58K. As our developer has recently set up a selling service for existing customers and we thought it would be easier to make use of this service.

The charges quoted were 7% plus vat; this included all legal costs, cancellation fees, property taxes etc. This initially seemed quite reasonable, I therefore asked for written details of what the overall cost of selling would be.

On receipt of the details we found lots charges which we do not understand and would appreciate your comments, in brief the charges are as follows:

a) Sewage tax: for the period of 2004 to 2008 1,814 euros, for some reason this amount includes a 7% interest charge for each year?

b) Immovable property tax: for the period 2004 to 2008, this is quoted at 3.5% per 1000 and again includes a 7% interest charge per year. Amount is 1,230 euros. The deeds are not yet available and I thought that any tax was payable on receipt of deeds.

c) Private sale: If we were to sell privately they have quoted an administration charge of 3% plus vat. We do have a “right to sell clause” in our contract so not sure if they are able to charge this.

Appreciate your valuable advice on this matter.

Regards,

Paul.



Nigel Howarth
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Re: Selling Charges

Post by Nigel Howarth » 23 May 2008 16:06

Hi Paul & welcome to the forum,

A lot of people have financial issues with their developer when they try to sell their property.

If you'd sold through a Registered Estate Agent, they would have probably charged you around 5% of the selling price (+VAT). So if you look at it that way, your cancellation charge is 2% - 1,160. This is quite good compared to some - I know of people who have been charged 14,000 for the 'privilege' of selling their property.

Assuming that he's not asked you to pay the Sewerage Tax bill before, the reason he has added the 7% interest is that he hasn't paid it and the authorities have charged him 7% p.a. by way of a penalty. The basic sewerage charge is about right, but your developer needs to put the 7% interest charge he's trying to pass onto you somewhere where the sun don't shine!

Regarding your Immovable Property Tax - do you know if it's from the Municipality or the Inland Revenue? The reason I ask is that there's something like a community charge here that you pay to the local authority - in some places this is called an Immovable Property Town Tax. But there's another Immovable Property Tax collected by the Inland Revenue. Some of the property developers are making a nice little earner by scamming buyers - you can read details on my news site at http://www.news.cyprus-property-buyers. ... rty-tax-2/

But regardless of which Immovable Property Tax we're talking about, the 7% interest charge is a con (assuming that the bill's not been presented to you in the past).

Regarding the "Right to Sell' clause - without seeing the actual wording of the contract, it's impossible to say whether the developer is within his rights to charge you 3% (but I suspect not).

If your "Right to Sell" clause doesn't allow the developer to charge you 3%, you should expect to be paying 4 years sewerage charges and property taxes (but no interest) or administration fees.

And you will need to get detailed receipts for any money you end up paying - some of the charges may be used to offset your Capital Gains Tax liability.

(There's also another scam that's recently come to light. These occur when the agent selling the property on behalf of the original buyer is the property developer. You can read about this on my news site at http://www.news.cyprus-property-buyers.com/ - it's the 'Featured Article No. 3')

If you could post your Right to Sell clause, I may be able to advise you better on the 3% administration charge.

Regards,


Nigel Howarth
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spottydog
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Joined: 22 May 2008 18:46

Re: Selling Charges

Post by spottydog » 23 May 2008 16:47

Nigel,
Many thanks for your prompt response, the right to sell clause is worded as follows:

“If at any time after the signing of the present agreement and for any reason the purchaser desires to sell the said property, he has an absolute right in doing so as he is the beneficial owner of the property providing that the purchaser has fulfilled all his obligations as herein provided. The vendor shall be obliged and cannot, in any way, object and / deny or withhold his consent to sign any necessary cancellation agreement and new agreement of sale with new purchaser, provided that the vendor shall not be liable for any taxes and / or other related expenses as a result of such transaction.”

With regards to the immovable property tax I do not know if this is the inland revenue or the municipality, if it helps our property is in the Paralimni area.

Kind regards,

Paul



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Re: Selling Charges

Post by Nigel Howarth » 24 May 2008 19:00

spottydog wrote:The vendor shall be obliged and cannot, in any way, object and / deny or withhold his consent to sign any necessary cancellation agreement and new agreement of sale with new purchaser, provided that the vendor shall not be liable for any taxes and / or other related expenses as a result of such transaction.
I guess the question is - have you paid for everything - and have you paid the related expenses?

I can't help with the IPT - you'll need to ask the developer for the invoices/receipts that he's received.

Cheers,


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spottydog
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Re: Selling Charges

Post by spottydog » 24 May 2008 19:24

Nigel,
We have paid all fees that we are aware of apart from a final payment of 1000 cyp, this was payable after 2 years provided there were no defects and a further 100 cyp on transfer of deeds. We still have defects outstanding therefore the 1000 cyp has not been paid, the developer is fully aware of this, not sure how this makes things stand.

Regards,

Paul



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Re: Selling Charges

Post by Nigel Howarth » 24 May 2008 20:55

Hi Paul,

So I guess that the CYP 1,000 is still in dispute - you need to resolve this with your developer. Have you been asked to pay anything else?

Cheers,


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spottydog
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Re: Selling Charges

Post by spottydog » 25 May 2008 01:29

Hi Nigel,
The 1000 cyp is being held back as the external painting was not up to standard, other have also complained and the developer had promised to repaint the whole complex. However, I doubt if this will ever happen, we are the only purchaser who did not accept the developers contract and therefore only ones with any outstanding money to try and force them into taking any action. If it helps to make the resale smoother we are prepared to pay the outstanding amount.

Other than the sewage and immoveable property tax we have not been asked to pay anything further.

Regards,

Paul



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Re: Selling Charges

Post by Nigel Howarth » 25 May 2008 15:02

spottydog wrote:The 1000 cyp is being held back as the external painting was not up to standard, other have also complained and the developer had promised to repaint the whole complex... we are the only purchaser who did not accept the developers contract
I'm getting a bit confused (I put it down t old age). You say that you held back CYP 1,000 - but then say you didn't accept the developer's contract. I don't understand. Is this the money you held back due to problems at delivery - a snagging list payment?

If you entered into a contract with the developer, the you are legally bound to fulfil the obligations contained therein (even though you may have subsequently felt the contract wasn't very good). If your contact contains the necessary clause(s) to withhold money until the items on the snagging list have been resolved, that's fine. But if you've not paid money just because he hasn't done something that you think he should, you're batting on a pretty sticky wicket.

Cheers,


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spottydog
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Re: Selling Charges

Post by spottydog » 25 May 2008 16:08

Hi Nigel,
I always find it difficult getting information across with e-mails etc, apologies for any confusion.

Just to try and clarrify, the contract of sale was drawn up by Areti Charidemou Law Office in Limassol and differed from the developers standard contract, it included penalties for not completing on time and had different stage payments. The final stage payment, which is the one we are still withholding, was 1000 cyp to be paid 2 years after delivery provided there are no defects. Because of the poor paint finish, which the developer has acknowledged, we have refused thus far to pay this final amount until this is rectified.

Hope that makes things a little clearer, considering this do you think we have any chance of avoiding the 3% charge because of the "right to sell clause".

Many thanks,

Paul



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Re: Selling Charges

Post by Nigel Howarth » 25 May 2008 19:15

Hi Paul,

This is something you'll need to resolve with your developer. On the face of it, you have the right to sell your property and your developer cannot stop you. However, if you haven't paid the money and he believes you should, he could delay matters.

I see that you're in a complex and that it's the external paintwork that's a problem. Maintenance of the common areas, which includes the external walls, is something that will be covered by your maintenance agreement. So have a word with your Management Committee - they may already be pursuing the developer on your behalf.

Regards,


Nigel Howarth
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spottydog
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Re: Selling Charges

Post by spottydog » 25 May 2008 19:28

Nigel,
Many thanks for all your replies, much appreciated, I will keep you posted on the outcome.

Kind Regards,

Paul



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Re: Selling Charges

Post by Nigel Howarth » 27 May 2008 13:40

You're welcome Paul,

If you'd like to send me a PM with the name of the developer, I'll try and find out if there are any other people in a similar situation.

Regards,


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Pantheman
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Re: Selling Charges

Post by Pantheman » 28 May 2008 18:01

spottydog wrote:Nigel,
Many thanks for all your replies, much appreciated, I will keep you posted on the outcome.

Kind Regards,

Paul
Hi,

Notwithstanding everything you have said, but I just wonder why on earth you are concerned about the external paintwork when you are looking to sellup???

Seems to me, you maybe just cutting your nose to spite your face. Since you want out, and since life could be made easier by paying all your dues don't you think that that would be the best way forward. You could easily have added that to the sale price if you wanted to so as not to lose out.

otherwise you just face a long drawn out row with the developer who probably couldn't careless. £1000 is quite possible so insignificant that he hasn't even bothered to pursue it.

If I were in your shoes, I would just pay and be done with it, priciples in this case just ain't worth it.

Nigel, sorry to hijack your answers, but it begged the question.

Good Luck though whatever you decide to do.


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Re: Selling Charges

Post by Nigel Howarth » 29 May 2008 11:00

No worries Pan,

I suspect Paul wants the outside repainted to make the place look more attractive to potential buyers.

Cheers,


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