Property acquisition in Cyprus could be a daunting task, in particular, for someone unfamiliar with the local legislative system. It is the more so and particularly risky when the property you intend to buy has no title.
In this case you cannot avoid hiring a lawyer to represent your interests and protect your legal rights. However, you must be hundred per cent sure your law agent has done everything possible to protect your interests. Further on we will elaborate on five main issues you should pay attention particularly. It will help you to see the full picture: whether your lawyer is capable of protecting your interests while purchasing immovable property without title documents.
1. Check the purchase potential of the property in question.
2. Today there are still certain restrictions concerning the registration of a real estate to foreign citizens. For instance, EU citizens having residency permit in Cyprus have the right to purchase any number of land plots or real estate objects. Non-residents of Cyprus are entitled to purchase fields and land plots without restrictions however they can acquire title to only one house or an apartment. Finally, third-country nationals have the right to buy only one apartment/house, completed or under construction, with the total area not exceeding 4,014 square meters. All this means that signing of a property purchase contract may turn into a real disaster if you discover you have no right to register it to your name.
Make an estimate budget in written form. Official taxes and fees on property purchase in Cyprus are often linked to the price of the acquired object. In addition to the formal duties, you will have to pay the costs of legal aid (in other words, informal payments your lawyer made on your behalf). You will also need to pay the stamp duty and fees for reissuance of the title documents in your name. From the very beginning it is worth to pre-calculate your expenses at each stage of the acquisition process to be able to plan your budget properly. Accordingly, your lawyer must provide you with all the relevant information in advance.
3. Make sure the developer is not bankrupt.
You need to make sure the development company is reliable enough and will not face financial difficulties during the period of construction of your property. Therefore your lawyer should check the financial state of the developer in the Register of companies before signing the contract.
4. Make copies of construction permits and licenses of the Construction Department.
When you are buying newly constructed premises, you must be sure that the construction permits and licenses are properly completed. In case there are any discrepancies in these documents, you could face difficulties in obtaining the title at a later stage.
5. Check the title documents for the land.
This is the most important issue! A timely inquiry to the Land Registry Department will tell you whether the person selling you the property is its owner de jure, and whether there are any other sale contracts of this property already registered within the Department. You will learn about any other existing encumbrances (e.g. mortgages), which is extremely important for signing the contract.
When you have signed the contract but cannot receive the title documents, you can do the following.
Specific Performance. The Specific Performance Law stipulates the buyer of the immovable property can reissue the purchased property in his/her name by registering the duly signed copy of the contract in the Land Registry Department within two months from the date of signing of thr contract.
Registration of the contract within the Department makes it impossible to transfer this property to third parties or impose collateral obligations during the period the contract has legal force. Nota bene, that following the registration of the contract at the Department, no encumbrances can affect the performance of the contractual obligations.
After registering a copy of the contract at the Department, the buyer has the right to demand execution of the contract, i.e. transfer the title to property in his name, even if the owner is not willing to do so.
All the abovementioned issues should always be taken into account when buying property in Cyprus in order to avoid costly mistakes and unnecessary risks. The process of acquisition of immovable property in Cyprus is not in any way more complicated than similar ones existing in other countries, you just need to foresee all possible complications.
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