The Right of Specific Performance

How the right of specific performance is enforced

George Coucounis explains how in Cyprus the vendor cannot be enforced to comply with an order for the specific performance of a sale contract.

Any purchaser of an immovable property in Cyprus either with or without a separate title deed must be very careful on how and when he will exercise his right of specific performance of his sale contract. Moreover, he must be prudent to seek proper legal advice at the time he purchases the immovable property in order to ensure that the property is not mortgaged or burdened by any other encumbrance.

It seems that a lot of purchasers do not care to protect their rights at the outset as well as later, and afterwards they face enormous obstacles in their effort to get their title deed. Even more, they run the risk to lose their property and money and they blame others instead of themselves by not acting as they do in their daily life when visiting a shop to buy food, clothes or appliances. In the latter case, they search and examine everything so that the item to meet their requirements and ask for a guarantee. When they purchase a property, they give trust to the vendor or to his employees or even to third persons, instead of seeking independent legal advice to safeguard and protect their rights, before and after the purchase.

The best example is given through the jurisprudence of the Supreme Court in civil action No 287/2006 issued on 20.6.2008, whereby the two purchasers/appellants lost their appeal with costs because they did not simply follow the above.

Furthermore, they did not follow the right procedure in the exercise of their right of specific performance of the sale contract through which they purchased their apartment.

They purchased an apartment though the land was mortgaged, thus their property was mortgaged, too. The vendors did not pay the mortgage debt until the issue of the separate title deeds and the mortgage has remained registered on all apartments of the building, until now. They went further to file an action against the obliged vendors claiming an order of the Court for the transfer of the apartment they purchased and/or in the alternative, damages. On 5.4.2005, the vendors consented and therefore, the Court issued an order against them for the transfer of the apartment to the purchasers within eight months.

The specific performance of the sale contract was not even mentioned in the legal action or in the order. Consequently, the purchasers had to apply again to the Court in order to amend their pleading in the action and of the order of the Court for the specific performance to be added, in order to facilitate the transfer of the apartment through the Cyprus Land Registry.

When the purchasers/appellants applied to the Land Registry, they discovered that the apartment was burdened with a mortgage registered prior to their sale contract constituting an obstacle in the exercise of their right of specific performance. Consequently, they applied again to the Court claiming to impose punishment on the vendors for not complying with the order, thus being in contempt, alleging that the vendors, by accepting the order, impliedly undertook to remove the mortgage, something they did not do. They also put forward a version that the provisions of the relevant law for specific performance, Cap.232, were applicable in parallel with the inherent power of the Court to impose compliance to the orders it issues. In the contrary, the respondent/vendors alleged that an application for contempt is not provided with regard to an order for specific performance, under Cap.232.

It was decided that any person in whose favour an order for specific performance is issued, must apply to the Land Registry for the transfer of the immovable property in accordance with the provisions of article 4 of the law and if these are met, the transfer of the property is made in the name of the purchaser, without the participation of the obliged vendor.

It was further decided that although the order for specific performance is addressed to the vendors and includes the relevant endorsement, the said order does not refer to the vendor within the meaning of the law, since the transfer can be done without his participation.

An estate in land cannot be created outside the ambit of the Specific Performance Law, Cap.232, but only through its application. Since the matter is specifically regulated, any behaviour contrary to the agreement cannot be criminalized through the enforcement of the right of specific performance. As jurisprudence further states, an agreement for the sale of immovable property does not give the right to the purchaser to claim its registration in his name when there is a breach of the agreement. The rights of the purchaser are only limited to claim damages without giving him the right of specific performance under the provisions of article 76 of the Contract Law, Cap.149. It states that the rights acquired under a contract for the sale of land are personal and as such prima facie assignable.

A contract for the sale of land does not create an estate in land, that is, rights in rem.

Jurisprudence also reaffirms that an estate in land can only be created in the case a sale of an immovable property is made through a written agreement or sale contract which is registered at the Land Registry, in accordance with the provisions of the Specific Performance Law, Cap.232. The purchaser only then acquires the right in rem over the immovable property, which can be the object of specific performance, with the qualification that the property purchased has a separate title deed. The registration of the sale contract at the Land Registry according to the provisions of Cap.232 constitutes an obstacle in the dispose or sale of the property to any other person. Therefore, since there is a specific regulation in the law, the principles of equity do not apply.

As it is demonstrated from the above, the right of specific performance is specifically regulated and its enforcement through the punishment of the vendor cannot be ordered. The purchasers must always act prudently to avoid being in the same position as the above purchasers/appellants who lost their appeal with costs and they are stuck without registration of their apartment, which still remains mortgaged.