Buying without assignment agreement deposit?

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propex
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Buying without assignment agreement deposit?

Post by propex »

Hello everyone!

I am buying a resale properly (roughly 10 years old) and the seller never bothered to transfer the title from the developer (Aristo) to themselves. Thus an assignment agreement is created instead of a sale agreement and the hefty deposit fee is being pushed to us instead of a seller by their lawyers. The assignment agreement states we pay the whole amount of money (aside from the small reservation fee we have already paid) in the land registry after we get the permission from the council of ministers (we are non-EU citizens after all). Seller lawyers say there is no need to deposit the contract at all because of this. Our lawyer is useless, he just blinked at us and said he always suggests depositing the contract. There will be roughly 1-2 months period between us signing the assignment agreement and us going to the land registry to transfer the title to our names (and doing the payment simultaneously). If we do this, could someone assure us the 0.5% contract deposit fee won't be just slapped upon us the moment we come to a land registry to transfer the title to our names instead of depositing the contract on top of the transfer fees? Thanks in advance!
Nigel Howarth
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Re: Buying without assignment agreement deposit?

Post by Nigel Howarth »

Hello propex,

Your lawyer is correct - you need to deposit the assignment/vesting contract at the Land Registry. Here's an extract from the Citizen's Charter published by the Land Registry. It's rather 'wordy' I'm afraid:

If one purchases property from a person who is not the registered owner thereof, but he is a purchaser under a Sale Contract lodged, in other words, if he proceeds to the signing of a Vesting Contract, then, in addition to the above actions, he/she must:

- confirm that the Sale Contract has been lodged with the Lands Office.

- be informed by the vendor in the Sale Contract of the existence of any amount due by the transferor and/or other obligations to the vendor.

- arrange for the manner of payment of the Capital Gains Tax by the transferor.

- The deposit of a contract of sale is carried out at the District Lands & Surveys Office of the District where the property is situated, by completing Form DE130. The signatures of the contracting parties on the relevant form must be duly certified, unless they are duly certified in the actual Vesting Contract. The application to be lodged must be accompanied by the Vesting Contract duly stamped and by the Certificate of Payment of the Capital Gains Tax.


The fee for depositing a vesting/assignment contract is 0.5% of the sale price stated in the original contact of sale OR 0.5% of the sale price stated in the assignment contract, whichever of the two prices is the higher. The minimum fee is minimum fee €50 and the maximum fee €3000.

Depositing a vesting/assignment contract protects your interest by preventing the seller from selling the property to someone else or using the property as collateral for a loan.

It will take more than 1 or 2 months to get permission from the Council of Ministers - more like 6 months to a year.

Regards,

Regards,
Nigel Howarth
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propex
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Joined: 18 Dec 2018 15:06

Re: Buying without assignment agreement deposit?

Post by propex »

Thanks a lot, Nigel!

Do I get it correct there is an absolute necessity to deposit (or lodge) it? I was told we don't have to do it but again, I am not sure. We don't care if the vendor has an option to mortgage it or to sell it since we won't pay them until we transfer the contract.
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Re: Buying without assignment agreement deposit?

Post by Nigel Howarth »

You're welcome propex

You have my views and advice on the subject - if you want to do something else, that's your decision.

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Nigel Howarth
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propex
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Re: Buying without assignment agreement deposit?

Post by propex »

Of course, I understand, thanks a lot. Could you please tell me if this view
he/she must:

- confirm that the Sale Contract has been lodged with the Lands Office.
based on some specific Cyprus law? As in the necessity of the lodging is a must? Thanks in advance!

I address this article and the last paragraph of it: https://www.cyprusresales.com.cy/Cyprus ... -news.html
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Re: Buying without assignment agreement deposit?

Post by Nigel Howarth »

Hi Propex

Lodging a contract isn't required by law, but it's absolutely essential to protect a purchaser's interest.

If a contract of sale is not deposited at the land office, the vendor can sell the same property again to someone else. (There have been several cases reported where the same property has been sold to more than one person.)

Your lawyer must check that there are no claims (known as encumbrances and prohibitions) lodged against the property that will prevent for from owning it, despite the fact that you may have paid for the property in full.

Before the transfer of ownership can take place, the original purchaser has to supply receipts confirming he's paid Income Tax, any Capital Gain Tax and payments to the local council and sewerage board.

The reason the seller never bothered to transfer the title from the developer to themselves is because they didn't want to pay the Property Transfer Fees. Because of this, you will have to pay the Property Transfer Fees he should have paid - plus your Property Transfer Fees. You should negotiate a lower sale price to cover your additional cost. (If you know what the seller paid for the property, I can find out how mush his Property Transfer Fees will have been.

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Nigel Howarth
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propex
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Re: Buying without assignment agreement deposit?

Post by propex »

Nigel Howarth wrote: 19 May 2021 13:43

Because of this, you will have to pay the Property Transfer Fees he should have paid - plus your Property Transfer Fees.

This is the first time anyone told me this. Neither our lawyer nor seller lawyer ever mentioned this. Would you please provide me a link for this situation (law etc.)? Doesn't matter if it's in greek.
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Re: Buying without assignment agreement deposit?

Post by Nigel Howarth »

Hi Propex

A property is transferred by its owner to the purchaser.

If you don't have an assignment agreement in place, then:

1. The property is transferred from Aristo to the person who is selling it to you - and the person selling it to you would pay the Property Transfer Fees.

2. Once the property is registered in the name of the person who is selling it to you, you would pay the Property Transfer Fees.

In your case, the person selling you the property hasn't bothered to transfer the title from the developer (Aristo) to themselves.

(Property Transfer Fees are paid every time a property is purchased - the purchaser pays the Transfer Fees. See https://portal.dls.moi.gov.cy/en-us/%CE ... PERTY.aspx )

However, if you use a vesting/assignment contract, the Property Transfer Fees are only paid once. The property will be transferred from Aristo to you directly, without needing it to be transferred from Aristo to the person who is selling the property to you.

You will note in my earlier reply that the fee for depositing a vesting/assignment contract is "0.5% of the sale price stated in the original contact of sale OR 0.5% of the sale price stated in the assignment contract, whichever of the two prices is the higher. The minimum fee is minimum fee €50 and the maximum fee €3000."

The fee for depositing a 'normal' contract of sale is a mere €50.00.

The reason the fee for depositing a vesting/assignment contract is so much more than a 'normal contract is to compensate for the loss of the first transfer fee. I.e the transfer from Aristo to the person who is selling it to you.

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Nigel Howarth
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propex
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Re: Buying without assignment agreement deposit?

Post by propex »

Yes, this matches my records, this is why we won't deposit the contract. However, you have said we will have to "pay the Property Transfer Fees he should have paid" which has alarmed me. Is this literal "you will pay the transfer fee they should have paid calculated as a property transfer fee on official website" or a figure of speech like "they had to pay transfer fees but they haven't (also not sure they had to, they paid VAT on the property as they were 1st owner, aren't transfer fees waived in this case?), so you will kinda pay it for them in a form of a (smaller) 0.5% fee IF you deposit the assignment agreement"?

Thanks in advance!
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Re: Buying without assignment agreement deposit?

Post by Pantheman »

propex wrote: 20 May 2021 09:35 Yes, this matches my records, this is why we won't deposit the contract. However, you have said we will have to "pay the Property Transfer Fees he should have paid" which has alarmed me. Is this literal "you will pay the transfer fee they should have paid calculated as a property transfer fee on official website" or a figure of speech like "they had to pay transfer fees but they haven't (also not sure they had to, they paid VAT on the property as they were 1st owner, aren't transfer fees waived in this case?), so you will kinda pay it for them in a form of a (smaller) 0.5% fee IF you deposit the assignment agreement"?

Thanks in advance!
Dear Propex,

I sometime wonder why people seek advice on this forum only to dispute what is being given to them. Seriously, are you telling me you are prepared to pay for a property under assignment (having parted with the cash), and not register it at the land registry to safe guard your money??

For the sake of the 0.5% you will have paid for the property, hold a piece of worthless paper and not be recorded as the beneficial owner of the said property?? Am I misunderstanding something here??

Because if my understanding is correct, you are leaving yourself open to potentially losing your money (by not depositing the assignment), should the present vendor die (God forbid), as then the property will still be on his name and will form part of the estate, irrespective of the assignment you hold in paper form. What if he were declared bankrupt, divorced similar scenario. You are risking too much for the 0.5% (that should also be shared equally between buyer/seller).

Now, as regards to TFs and vat etc. If you don't register the assignment, and then there will be a double TF to pay either totally by you or he and then you, but let's say you have to pay for them both, he may well have paid vat and he may well be exempt for the TFs, but only in so much as the valuation the LR may place on the property. eg. if the original vendor bought it for 150k (say) but the LR valued it at 250k (because there were some dodgy dealings with the developer at the time of purchase say) then the LR will be looking for TFs on the additional 100k. The TF exemption is onl;y valid if the LR agrees with the initial valuations.

In any case, your lawyers should be telling you this, and if you do not want to take that advice merely to save the 0.5% fee then they should also make you sign a waiver (that's what I would do) to state that you were fully informed, but decided to ignore that advice. Because from where I'm standing you are doing this very thing here.

Unless of course I have totally misunderstood your situation in which case I apologise and discard all that I have said.

Cheers
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Nigel Howarth
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Re: Buying without assignment agreement deposit?

Post by Nigel Howarth »

Hi Pan

We're both wasting our time giving propex advice. I note in his opening message he wrote:

"hefty deposit fee is being pushed to us instead of a seller by their lawyers."

I have no idea why he believes the seller should pay to deposit HIS contract contract with the Land Registry. It's the BUYER who has to pay the contract deposit fee NOT the seller.

propex has made his decision. No advice from us will change his mind.

I've got better things to do than offer advice to someone who is intent on ignoring it.

Cheers,
Nigel Howarth
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