In Cyprus a sale of property or goods by auction is considered completed by the fall of the hammer, as George Coucounis describes.
The sale of immovable properties and goods by auction is used as an effective, quick and cheap method of sale resulting to a higher price compared to the usual methods. For this reason, more and more announcements are seen requesting people to participate by placing their offer in the purchase of a property in Cyprus.
This method is considered as an advertisement for the sale of a property, creating no liability to the vendor. However, the person who makes an offer which is accepted is bound and considered to have entered into a sale contract, unless he withdraws his offer before it is accepted.
The announcement states the particulars of the property, the place and time the auction will take place, even the reserve price, if there is one. The auction may be public or private, open to the public where everyone can participate, or limited to a group of people and in the presence of an auctioneer or not.
The auctions for the sale of immovable properties through the Cyprus Land Registry are always public, open to everyone interested to participate, take place on Sundays in places where there is access to the public, i.e. coffee shops, clubs or hotels and there is a competent auctioneer appointed by the Government. Announcements are always published in the press, placed on the notice boards of the land registry of the district in Cyprus where the property is situated, of the District Court and of the place where the auction is to be made.
A sale by auction is only completed when the auctioneer announces its completion by the fall of the hammer or in any other customary manner, whereby a contract of sale is created with the highest bidder, becoming the purchaser.
The auctioneer is not entitled to accept a lower bid than the reserve price if there is one and if by mistake he purports to accept a lower bid, no contract is made, since there is no consideration. Where a property or goods are put up for auction without reserve, there is no contract of sale if the auctioneer refuses to knock the goods or the property down to the highest bidder, though he is liable to the highest bidder on a separate promise that the auction would have been without reserve.
Another issue for consideration, after the sale is completed, is the refusal of the purchaser to comply with his obligation to pay the price. He is then regarded to have committed a breach of the contract of sale and thereby he is liable to pay damages to the vendor.
The principle applicable is for the vendor, being the innocent party, to mitigate his loss and damage by taking reasonable steps to this effect. The repetition of the auction is the correct procedure whereby the purchaser who committed the breach is called to participate. The outcome of the second auction will determine whether the vendor suffered any loss or damage. The measure of damages to the vendor depends on the difference, if any, between the sales price of the two auctions, plus interest. Normally, the compensation of the vendor is assessed on the difference in the price between the two auctions plus interest and any expense occurred for repeating the auction.
The aforesaid compensation can be claimed from the purchaser who refused to execute the sale contract by refusing to pay the sale price.
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.