Builders and developers in Cyprus have been getting bad press due to the “process” to acquire title deeds which can take up to 10 years or more! You would assume that anyone that pays for their property in full would be issued title deeds. However, this is not the case and I will explain what can happen and how to safeguard yourself when buying property in Cyprus.
In Cyprus, owners do not actually own the sign holders property or enjoy full benefits of ownership. Owners do not have the right to sell or transfer their property to anyone they wish, including heirs, without reference to the title deed holder who is most often the developer. To sell a property, the owner needs to cancel or transfer his contract of sale at the Land Registry office with the cooperation of the developer. Then the developer enters into a new sale contract with the new buyer. However, the ability to sell is not automatic. A special clause in the original contract of sale is needed which should limit the cancellation and transfer fee charged by the developer to a ‘reasonable’ amount. Without that clause, those wishing to sell their property are at the mercy of the developer.
Many buyers have been charged much greater amounts than the actual costs incurred by the developer to cancel their contract of sale. This results in eliminating any profit resulting from the sale of the property. An example of this is a case reported to Cyprus Property Action Group where a property developer is demanding CY£14,647.45 from a buyer claiming it is for ‘immovable property tax’. The property was purchased in 1982 for CY£37,270 and is still registered in the name of the property developer. The title deed is still awaiting transfer until the demand has been met. In other cases the developer can still get a mortgage against the land a buyer’s property is built on. It is used as collateral, without the owners knowledge or consent. This prevents owners from selling their property because no one is going to buy a property knowing there is a mortgage on it.
There are also some problems obtaining mortgages on resale properties without title deeds. Anyone that wants to buy needs to have cash or buy a home that has full deeds available. Some developers threaten not to release the deeds in order to demand extra payments or to stifle complaints by clients. At the end of a long wait the developer may not even transfer the property to the buyers and legal action may need to be taken.
Here are some security measures to take until deeds are issued:
Firstly, register your contract with the local Lands Registry Office. The sales contract must be signed within two months from the date of signing of the agreement. This will protect you in any subsequent sale that might follow the deposit date.
Secondly, get a release from the mortgagee. The release should be secured by the seller and it should stipulate that once the deeds are issued the mortgage holder will have no objection in releasing the deeds for transfer.
Thirdly, if you require a bank guarantee you will have to pay 1.8% on the amount of the guarantee. Also, carry out your own search through your lawyer regarding the seller’s financial standing and check his reputation in the local market. Buying from reputable developers opposed to small scale developers is generally a better bet even if prices are slightly higher.
Next, set a date in the sales contract when the developer is bound to transfer the title deeds. Lastly, make a provision in the sales contract that the developer must comply with a request for a resale with a fixed charge of no more than £1,500 so that you can cancel your sales agreement by selling it to another buyer. The original buyer will enter into a cancellation agreement and then the new buyer will enter into a new sales contract with the developer. In some cases the developer may ask the original buyer to cover his tax costs or to provide him with a tax release.
The above measures are not a substitute to having title deeds, but they are appropriate steps to protect buyers during the title deed waiting period. These are ways to ensure a stress free transaction and fully enjoy your property in Cyprus.
Cleo is the owner of Cyprus marketing solutions Ltd. a Paphos based company providing proven internet marketing solutions specializing in property sales in Paphos, Cyprus to families relocating and buying property in Paphos district and surrounding area.