A registered co-owner of a property in Cyprus has the first option to acquire an undivided share of that property, as George Coucounis explains.
A large number of immovable properties in Cyprus, either land or any other property, are held in undivided shares among members of the same family. This is common due to the close family bond and the parental care and love parents show to their children.
Another factor is also the acquisition of an immovable property through inheritance and the fact that families do not own separate properties, adequate to satisfy or be given to each individual member.
Therefore, many properties are registered in undivided shares causing a problem sometimes when a co-owner wishes to sell his share and the others do not. The issue is real when such a property cannot be divided or the co-owners do not agree to separate it. The law provides the solution giving the right to the co-owner to sell his share to a third person reserving the option to the co-owner if he so wishes to buy the share himself.
On the other hand, where there is no interest of a third person to buy an undivided share, the co-owner may be forced to apply for the sale of the property as undivided in public auction.
Article 25 (1) of Cap.224 provides the option to co-owners of an immovable property stating that when an owner of an undivided share in any immovable property makes a declaration before the District Lands Office that he has agreed to sell the same to a person who is not a registered co-owner in the same property, the transfer of such share shall not be registered unless (a) the vendor satisfies the Director that the other registered co-owner/s do not wish to purchase his share at the price at which it is been sold, or (b) the prospective purchaser advertises the proposed sale thereof or brings it to the knowledge of the other owner and no registered co-owner acquires the share there under. The proposed sale must be advertised in such form and in such newspaper/s as the Director may require, or shall be brought to the knowledge of the other owner by service upon him of a notice in writing.
Any registered co-owner may, upon lodging in the District Lands Office, within 60 days of the advertisement or the service of the notice, the price at which the vendor’s share is being sold together with the registration fee, be registered for such share. Any amount so lodged shall thereupon be paid out to the person who joined in the declaration of sale as purchaser.
It is observed from the above law provisions that the right of first option arises when a co-owner agrees to sell to a third person his share. The law does not restrict such sale and does not invalidate the sale of an undivided share due to the rights of the other co-owner; however, this right is brought and can be exercised when the sale of the share is made.
It can be said that the sale of an undivided share to a third person is on the condition of the other co-owner/s to purchase it or not. If the said right is exercised, the co-owner acquires the share sold and the third person is refunded with his money and the transfer fees paid.
On the other hand, the co-owner may decide not to exercise the right and he loses it if he does not comply with the provisions of the law.
Consequently, the new purchaser is not registered as a new co-owner of the property, unless the co-owner does not exercise his right as aforesaid. In practice, a written declaration by the co-owner is asked that he is not interested to purchase the share and provided it is given, the share is registered in the name of the third person. Otherwise, the third person of the undivided share has to wait for the time provided by the law to pass in order to be registered as the new co-owner.
It is clear that a purchaser of an undivided share in the event a co-owner exercises his option, will receive his money and the registration fees without being entitled to raise any claim either against the vendor or the co-owner. The right of first option of the co-owner is safeguarded by the law and everyone is considered to know it.
A reasonable question that may be asked is what happens if a co-owner is unable to purchase the undivided share of his co-owner. Will it not be unfair to the financially weaker party to face the possibility that the property will be declared undivided and therefore placed in a public auction for sale?
This is a reality, but the law and the precedents of the Supreme Court of Cyprus lean towards eliminating co-ownership.
George Coucounis is an experienced lawyer practicing in Larnaca, Cyprus.
Educated at University College (London) and Thessaloniki University (Greece), George is fluent in English and has been practicing law in Cyprus since 1982.