Breach of Contract by the Vendor

Breach of contract by the vendor and the purchaser's options

The reaction of a purchaser of an immovable property in case of breach of the sale contract by the vendor defines the rights and remedies the court in Cyprus will award, as George Coucounis describes.

The reaction of the innocent party in case of breach of contract is of great importance, since it defines the remedies he can claim against the other party who is in breach. In the case of a purchaser of an immovable property where a breach is committed by the Vendor, the position the purchaser will take is crucial because if he is not aware of the actual remedies he is entitled to, he may lose the property and receive only damages.

The innocent party is the one who has fulfilled his contractual obligations and there is nothing for him to do for the execution of the contract. Therefore, if the purchaser fulfills his obligations under the sale contract and the Vendor commits a breach in the sense that he refuses to deliver or transfer the property sold, the purchaser in such a case must stick to his agreement and request the vendor to do the same. The purchaser, by doing so, will keep the property and the vendor will have to deliver and transfer it, thus he will be prevented from keeping the property to his benefit.

The purchaser who deposits the sale contract at the District Land Registry in Cyprus, is protected by the law, and in particular is entitled to the right of specific performance of his contract.

The estate in land which is created upon the deposition of the sale contract remains valid and affects the property until the completion of the property and the issue of separate title deed. Furthermore, it will remain in effect until the vendor informs the purchaser in writing that the separate title deed has been issued and sends a copy to the purchaser. Thereafter, its validity will be only for six months, during which the purchaser will exercise his right for specific performance of the sale contract, if the vendor refuses to transfer the property. In the case of a property which has a separate title deed, the period of six months starts from the date stated in the sale contract for the payment of the last installment.

It must be worth noted that when a property has no separate title deed, the purchaser can not claim the specific performance of the sale contract.

In relation to the above, in a similar case before the Supreme Court, the purchaser due to ignorance of her rights, lost the apartment, she was ordered to deliver its possession and received only the sum agreed as its value. In particular, the purchaser bought an apartment and took possession of it. The vendor died, and his heirs claimed that the purchaser had no right to remain in possession of the apartment and they denied that it was sold to her. The purchaser indeed purchased the property under a sale contract which provided that the transfer would take place when the separate title deed was issued. When the heirs filed an action against her for trespass, she made the mistake to file a counter claim requesting compensation for the value of the apartment and or for its registration into her name, instead of sticking to the sale contract. By filing a counter claim she accepted the termination of the agreement, claimed the value of the apartment and therefore she lost the right to keep the property.

The Supreme Court ordered her to deliver the possession of the apartment to the heirs of the deceased vendor, because the agreement was no longer valid.

The purchaser who was the innocent party by filing a counter claim in the manner she did and not insisting to her agreement, she lost her right to keep the possession of the apartment and to claim the transfer of it into her name. She received the money but she lost the apartment.