Removing a Sale Contract from the Land Registry

Removing a Sale Contract from the Land Registry

George Coucounis gives advice on how, and when, a contract of sale can be removed from the Land Registry, with specific reference to a recent case in the District Court of Larnaca.

The registration of a sale contract at the Land Registry creates an estate in land upon the whole property of the vendor and it secures the rights of the purchaser and particularly, the right of specific performance in the event the vendor fails or refuses to transfer the property sold. The estate in land created and consequently the right of specific performance lasts only for the time period stated in the relevant law and ceases to be enforceable thereafter.

There is a distinction in the law between properties with a separate title deed and properties without one. When a property has a separate title deed, the time period of six months provided in the law for the exercise of the right of specific performance starts from the date of the sale agreement, unless a later date is expressly or impliedly provided in the agreement for the transfer of the property or for the payment of the last instalment. The allegation that the aforesaid time period starts from the day the purchaser asks the vendor to appear before the Land Registry Office to make the transfer is not correct and the adoption of this may result to the loss of the right of specific performance.

When a property does not have a separate title deed, its transfer is not possible and the estate in land created with the registration of the sale contract at the Land Registry remains in force until the issue of the separate title deed and even further until the vendor informs the purchaser of the issue of the deed by double registered letter, unless the purchaser takes notice of the fact otherwise. In such a case, the six months’ time period for the exercise of the right of specific performance starts and the purchaser ought to care to arrange with the vendor the transfer of the property into his name within the said period. Thus, if the vendor refuses or omits to transfer the property to the purchaser, the latter can exercise the aforesaid right by taking a legal action against the vendor for an order of the Court ordering the transfer of the property into the name of the purchaser without the participation of the vendor, i.e. an order for the specific performance of the sale contract.

Recently, a dispute arose between the vendor and the purchaser of an enclosed piece of land which had a separate title deed, whereby the one party blamed the other for not completing the agreement. The sale contract provided for the payment of the balance of the purchase price on a certain date upon which the transfer of the property was to take place, giving the right to the vendor to terminate the agreement in case the purchaser did not make the said payment on time. Moreover, the sale contract provided that the vendor had to secure a public road to the property. Both the vendor and the purchaser did not fulfil their contractual obligations and ended up before the Court to resolve their dispute.

The District Court of Larnaca in its judgement decided that the respective obligations of the parties were separate and independent. The termination of the sale contract made by the vendor was declared not valid, since he did not give a reasonable notice to the purchaser before the termination to pay the purchase price. On the other hand, the purchaser claimed that he was entitled to exercise his right of specific performance under the sale contract and the law and that he was ready and willing to pay the price.

Under the circumstances, the vendor was not able to provide a public road to the property and due to that, he did not claim the payment of the price at the time stipulated in the sale contract. Two and a half years later, without a prior notice to the purchaser, the vendor terminated the sale contract claiming that the purchaser was in breach of an essential payment for not making the payment of the purchase price.

The Court referred to the law and rejected the allegation of the vendor that he lawfully terminated the sale contract, which remained in force. However, it issued an order in favour of the vendor for the removal of the registration of the sale contract from the Land Registry records, since according to the law, the six months’ period had expired and the right of the specific performance was lost. The purchaser should have exercised it within a period of six months from the date of the payment of the price provided in the sale contract.