This article focuses mainly on the necessary procedures that a would-be buyer must follow in accordance of the purchase of the residential property in Cyprus. What would-be buyers should know before buying property in Cyprus is that the legal system exists to protect the buyers, if of course they take advantage of this legal framework.
With the accession of the Cyprus to the EU, an important number of nationals from EU member states have established second homes and holiday homes in Cyprus, taking advantage of the all year round good weather and the relatively cheaper real estate prices if compared to their home countries.
First things first, a would-be buyer should inspect the title of the property they are about to buy to reveal any mortgages or charges or court judgment against the title. This task can be undertaken by a local consultant who can also obtain the planning and building permits as well as the final building certificates.
A common mistake is for buyers to sign the developer’s standard terms without really considering the implications from a contract which is naturally in favour of the seller. Negotiating certain terms is the right of the buyer and it is advisable that a buyer of a property in Cyprus seeks the advice of an experienced Cyprus legal consultant who can review the terms of the contract and negotiate with the buyer for the protection of the buyer’s interests. (It is important for potential buyers to know that a lawyer/legal consultant may not be representing both the developer and the buyer as that creates a clear conflict of interest. Independent legal advice should always be sought). The contract would then be signed from the buyer first and then from the seller after the first payment or deposit is made.
Amongst others, two very important clauses which a buyer should seek to include in a contract for the purchase of a property a Cyprus are:
- Delivery and penalties: The developer to be obliged to deliver a finished property on a pre-agreed date with a provision for penalties if this delivery is delayed.
- Reserve amount: It is often the case that minor problems appear after the transaction has been completed and the buyer has moved into the property. Unfortunately it is also often the case that a developer, having been paid the full amount as agreed, will delay or even never show up to fix incomplete features of the property. It is for that reason that buyers should make provisions to hold an amount for a period of time after the property has been transferred to them so that the developer will have an incentive to make any repairs after the property has passed to the buyer.
Between the time of the signing of the contract and the transfer of the title, the seller must settle all the taxes in relation to the property such as Local Authority Taxes. The transfer of a title can only be completed if all tax clearances are made available and the transfer forms are signed by all parties and stamped by the various government departments. Taxes on properties in Cyprus are payable annually and the rate varies from area to area and depending on the property type.
Even before the transfer of the property a buyer should pay stamp duty on the contract and which should then be deposited with the Land Registry. Doing so, informs the Land Registry that the buyer has a right to the property and in that way a subsequent third party cannot be registered as the owner of the specific property. This prevents the seller to mortgage, charge, resell or interfere with the buyer’s rights on the property.
After the settlement of the purchase price, the property can now be transferred to the name of the purchaser at the Land Registry. On the transfer of the property to the new owner the seller should provide the buyer with the necessary documents such as title deed, architectural plans and any other paperwork.
A fact that foreign buyers should know is that with the EU accession the General Attorney in Cyprus has given his consent to the District Officers to lift previous restrictions on EU citizens and now EU citizens can freely purchase or transfer any type of land and property in Cyprus. In contrast non-EU citizens can purchase one apartment or a building plot of land not exceeding the three donums. They must provide the District Officer with the necessary documents such as their identity card, the title deed, the plot deed etc.