Purchasing immovable property in Cyprus
George Coucounis describes how purchasing immovable property in Cyprus has always been a profitable investment, secured by the country's sound legal system.
A prudent purchaser/investor by following the procedures prescribed by Law can fortify his rights and simultaneously does not allow his rights and interests to be jeopardised. A good agreement which defines the relations between the contracting parties and provides solutions to the various issues concerning the vendor and the purchaser of immovable property, limits any potential differences and, even more, a legal dispute. Thus, the following basic information and elements must be included in a sale agreement concerning the purchase of immovable property:
- Validating information related to the vendor and his interest in land, enables the purchaser to buy solely from the registered owner. This allows the purchaser to deposit the sale contract to the Land Registry in Cyprus for specific performance purposes, within 60 days. The deposit of the sale contract affects the land in question by creating an estate in land upon it and makes the purchaser the equitable owner of the property purchased. The estate in land created is valid until a separate title deed is issued for the property purchased and six months further provided the purchaser has been informed.
- The property at issue should be properly described in detail; a copy of the title deed, the topographical plan, the town planning permit, the building permit, the approved architectural plans and the technical specifications must be referred to and attached to the sale contract. Where a property is sold off plan, its internal and external dimensions, the parking space suitable for a car to fit in and the storage must be ascertained. Prior to preparing the sale contract, a relevant search must be conducted at the Land Registry for any possible obstacles, mortgages, memo/s or other legal matters affecting the land and/or the property.
- The mode of payment should be in accordance and analogous to the stage of the construction process. Each payment must be made after a certificate of completion is issued by the supervising architect or engineer, except the 1st instalment which is payable upon signing of the contract. At least 10% of the price should be left due until the completion and the delivery of the property to the purchaser. The technical specifications must be as precise as possible describing the materials to be used, their quality and retail value.
- The building must be constructed according to the conventionally acceptable level of art as recognised by the official board of architects and civil engineers association. In addition the building should comply with the terms and conditions as set out by the relevant permits and approvals.
- The time of the completion of the property should be stated in the sale contract. The property at the delivery date must be fully equipped with water and electricity supply duly provided by the appropriate authorities, clean and ready for use and occupation and in tenantable condition. The purchaser must be entitled to inspect the property in order to accept its possession. In the event that there are defects to be remedied, the purchaser must have the right to prepare a snagging list and ask the vendor to rectify any such defects prior to the delivery of the property. Where the vendor fails to deliver the property at the time and state specified, the purchaser must be entitled to compensation equal to the rental value of the property and any other consequential loss/damage suffered.
- Moreover, in the event the purchaser obtains a loan, the vendor should undertake to assist him in his application and in securing it by signing all necessary documentation and to execute a mortgage upon the property and/or the land. The purchaser will be liable for all payments relating to the execution of such loan and for its repayment.
- The transfer and registration of the property by the vendor in the name of the purchaser, free of any mortgage or other encumbrance shall be made when a separate title deed is issued by the Land Registry in respect of the property and on the application of the vendor after the development's completion. The vendor shall do his outmost not to delay the issue of the title deed, at his own cost and expenses and when such deed is issued, to notify the purchaser by a double-registered letter and to send a copy to the purchaser.
- The purchaser shall be exclusively responsible for the payment of the stamp duty on the sale contract as well as the transfer fees for the registration of the property into his name. If at any time after the signing of the agreement the purchaser desires to sell the property at its current market value, the purchaser must have an absolute right to do so as he is deemed to be the beneficial owner of the property, provided that he will fulfil all his financial obligations to the vendor.
- While the property is under construction, the vendor should be responsible for the property and have it insured for ordinary insurable risk at its value. The vendor must give the purchaser a 12-month guarantee from the date of delivery of the property for good workmanship of its construction and undertake to rectify free of charge any defect, default or deficiency in the property.
- If the land upon which the property will be built is mortgaged, the vendor is obliged to provide the purchaser with a bank waiver stating that the bank will remove it, consent to its transfer and commit itself not to sell the property in public or private auction or otherwise.
- Any expenses or fees or dues or taxes in respect of or imposed or charged on the property until the date of delivery of possession to the purchaser will be burdened exclusively by the vendor, including capital gain tax or any other tax. As from the date of delivery of the property, the purchaser must pay all taxes or rates corresponding to the said property, including the immovable property tax, all electricity and water bills and any other expenses related to the occupation and use.
- The purchaser becomes co-owner of the commonly owned spaces and acquires the rights and accepts the liabilities arising. For the better regulation of the aforesaid rights, obligations and the relation of the purchaser with the other owners in the same development, there are standard regulations provided by Law 6(I)/1993 and any amendment which must be applicable.
A prudent purchaser should always take the above into consideration before signing a sale contract for the purchase of an immovable property in Cyprus as well as to consult an independent lawyer specializing in the Immovable Property Law.