AN OUTLINE OF THE LEGAL PROCESS IN PURCHASING IMMOVABLE PROPERTY IN CYPRUS
Cyprus is increasingly becoming an attractive place to live and work, as a result of its tax and other advantages and incentives, good climate conditions, comparatively low cost of living and other factors, such as low crime rate, excellent telecommunications, wonderful sea shores and hospitable people.
A word of warning: Do not buy any property in the occupied North of Cyprus. In all probabilities the land on which the property has been built has been usurped from its rightful Greek title holder when s/he was uprooted by force during and after the Turkish Invasion in 1974. Also be aware that by virtue of Cypriot, European and International law any such purchase is in law void ab initio (from the beginning) and you may without realizing be faced with a Court action both in Cyprus and in the European Courts and be forced to return the property to its rightful owner without any compensation.
Once you have decided which property to purchase you should immediately consult a good and reputable conveyancing lawyer. He is the person who will guide you through the legal side of your purchase. Having found a lawyer you think you can trust you should give him the relevant instructions to draft the Contract of Sale or to check the one usually provided by the Vendor/Developer. Once your lawyer makes the necessary enquiries and is satisfied that everything is in order you and the Vendor/Developer should initial and sign the Contract where appropriate and have it witnessed by 2 witnesses. Your lawyer should then undertake to attend the Cyprus Stamp Duty office and pay the stamp duty for you. This is a government tax payable almost always by the purchasers on all Contracts of Sale before they are duly lodged for registration at the Land Registry Office in the area where the property is situated. The amount payable is CYP£1.50 for every CYP£1.000 worth of the property up to the amount of CYP£100.000 and CYP£2.00 for every CYP£1.000 for any amount above CYP£100.000.
The next step in the legal process is the lodging or depositing of a copy of the Contract with the Cyprus Land Registry Office in lieu of and until the title deed of the property is duly transferred upon you at a much later date. There is a fee of CYP£1.00 payable and this safeguards your purchase and amounts to a notice to the whole world. It also enables you to seek specific performance, i.e the execution of the contract, against the other contracting party if any dispute as to the ownership of the property arises.
Usually the Contract of Sale will be drafted in such a way that it will allow you to pay by structured payments, according to the process of the building done to the property. This is a matter one should discuss with the Developer/Vendor according to what one can afford in the course of time. Usually the Developer/Vendor requires the purchaser to pay the last instalment upon delivery of the property. In some cases the purchaser holds some money back until the transfer of the title deed of the property to him. However, as I have already said this is a matter to be agreed between the parties.
A word of warning: In order to safeguard your payments to the Developer until the actual date of delivery of the property, you may reasonably ask for a bank guarantee of your payments, even if you will be paying the bank’s charges. I am sure no good and respectable Developer/Vendor will refuse to provide you with this service but you must ask for it, nothing is volunteered.
Your lawyer should also ask you to fill a certain form, which he will send to the Local Authority, where the property bought is situated, for the Cyprus Council of Ministers’ permission to own property in Cyprus. Although a formality really, this is a requirement for all European citizens who wish to buy a property in Cyprus as a holiday home, but not for those who intend to live in Cyprus permanently. This requirement is one of the derogations obtained by the Cyprus Government from the European Union upon its entry into the Union on 1st May 2004 and will last for 5 years. After the 5 year period no such requirement will be needed.
I must add here that your lawyer should also make sure that a provision for re-selling the property is incorporated in the Contract of Sale, so that you are able to sell the property at any time before or after completion and before the transfer of the title deed upon you as purchaser. There may be reasons why you may wish to sell the property before the transfer of the title deed and you should insist on such a term being included in the Contract.
During the building of the property you will be asked to pay the instalments. Before you do so ask the Developer/Vendor to verify the extent of the building either by an architect’s certificate or by photographs. You may also check by visiting the site yourself, or by asking a friend to do that for you.
When the property is finished and provided you have paid the consideration money due, you will be handed the keys and be asked to visit the Electricity Board and the Water Board to register yourselves with them. For this purpose your lawyer should hand you, if you do not have one with you, a copy of the Contract of Sale. Once that is done you then make sure that your new furniture, which you have already bought, are delivered to your new Cyprus home.
Last, but not least, you must remember that when the title deed is eventually issued, you, as purchaser, will have to pay transfer tax to the Government at the rate of 3% on any amount up to CYP£50.000, 5% on any amount between £50.000-£100.000 and 8% on any amount over CYP£100.000.
Your next step: Enjoy and have a happy life in your new Cyprus property. Good Luck!
