The property conveyancing process
The process starts after an offer has been made and accepted for a property and lawyers’ details have been exchanged. Both parties must be legally able to sell or transfer the property before the process begins.
The vendor’s lawyer will draw up a contract of sale. As a buyer, your lawyer will review the contract of sale and make various enquiries on your behalf to protect your interests.
One of the first things your lawyer needs to do is carry out a Title Search at the District Land's Office. The point of this search is to establish whether the property you are thinking of buying is owned by the person trying to sell it and whether there a mortgage or any other claims lodged against it. (You can read more about how these claims work in Cyprus in my 'Property Claims' and 'Specific Performance' pages).
If your lawyer finds that the property is mortgaged, you may pay an agreed proportion of that mortgage to the mortgagee (usually a bank). The mortgagee is required to accept this - and your contract of sale, having been duly lodged at the Land Registry repay an amount of that mortgage will take precedence over that mortgage.
The potential consequences of not repaying a proportion of any mortgage on the land/property to the vendor's mortgagee are disastrous; you risk losing everything.
You may also ask your lawyer to arrange for a surveyor carry out a Plan Search at the Town Planning office. This establishes whether there are any developments in the pipeline near the area in which you're buying. Unlike the UK, getting a formal written statement from the planning authority is not possible. The best that can be expected is an informal, non-binding, off-the-record comment from one of the officers. A lawyer will be able to advise buyers about the zoning of the area, the building capacity and density, but not if a neighbour has applied for permission to start up a pig farm! And as the zoning may change, a lawyer would not be able to offer guarantees on this aspect of a purchase.
DO NOT make the mistake of taking the developer at his word when he says he has no intention of building in front of you - get your lawyer to check it out.
Planning permission & building permit
If Title Deeds for the property you are thinking of buying have yet to be issued, ask your lawyer to check with the authorities that Planning Permission & Building Permits for its construction have been issued. Your lawyer will probably arrange for a surveyor to carry out this task.
Building without the required Permissions & Permits is illegal in Cyprus - so make sure that your lawyer checks that they've been issued.
To protect your interests put your stage and other payments in escrow until such time as the vendor presents the required permits and approved plans to your escrow agent. (Your lawyer may act as your escrow agent). If you discover that the approved plans differ from the artist’s impression, you may be able to recover your money.
Your lawyer will review and possibly amend the contract of sale provided by the vendor's lawyer to ensure your interests are safeguarded.
Once your lawyer is completed their work on your contract, you should be given the opportunity to review it & discuss it with him/her. If there is anything you don't understand, now is the time to ask.
Once you are satisfied with the contract you need to sign it. Be aware that once you have signed a contract that's it - there's no contract cooling off period allowing you time to rethink your decision.
Once all parties have signed the contact, four copies are made and stamped at the District Lands' Office. One of these copies is stamped 'original' and will usually be kept by your lawyer. The remaining copies are stamped, with a Revenue Stamp and certified as being true copies of the original.
The contracts used by property developers or drawn up by their 'tame' lawyers are very biased in their favour leaving the buyer with very little, if any, protection.
Your lawyer will ask you to pay an amount of Stamp Duty. This is payable by you when you sign the contract - the rates are as follows:
€ 1.50 per thousand for purchase prices up to € 170,860 and
€ 2.00 per thousand for the part of the purchase price exceeding € 170,860
So for a property costing € 256,290 the Stamp Duty payable by you is € 427.15.
Deposit contract of sale
Your lawyer needs to deposit one copy of the contract of sale at the District Lands' Office for what is known as 'Specific Performance'. This is a vital stage in the property conveyancing process that I discuss in the Specific Performance page.
Taking possession of the property
Once the obligations of the seller and buyer, as stated in the contract of sale, have been fulfilled, you may take possession of the property.
Be aware that although you may have paid for the property in full you do not own it until 'completion'.
Completion is defined as “When the sale and purchase of the property are finalised, and you become the legal owner of the house or flat”.
In the UK, the solicitors acting for the vendor and buyer agree a completion date & advise their clients accordingly. Usually it’s within a couple of weeks of exchanging contracts.
Unfortunately, completion in Cyprus can take years or even decades. I personally know several people who have been waiting more than 20 years to complete on their purchase and someone who has been waiting for 30 years.
Completion cannot take place until the Title Deed for the property is available. And to put it bluntly, the time it taken to issue Title Deeds is totally unacceptable.
You can, if you choose, pursue the Land Registry through the Ombudswoman and the property developer though the Court.
During my CyBC radio discussion with MP Rikkos Erotokritou, he said “the House of Representatives are worrying a lot about the situation”. (Click here to listen to the podcast). In 2011 and after years of debate, the government revised a number of laws designed to reduce bureaucratic delays in issuing Title Deeds. It will probably take two or three years before their effectiveness may be judged.
(To give you some idea of the scope of the problem, it’s been estimated that around 130,000 properties have yet to be issued with Title Deeds!)
The completion process
The transfer of ownership from vendor to buyer is carried out by staff at the District Lands’ Office, who they need the following information:
A completed Form N270 - ‘Declaration of Transfer of Immovable Property’.
The relevant Title Deed being transferred.
A completed Form N313.
For EU citizens, your passport.
For non-EU citizens, a certified copy of the Council of Ministers’ permission to acquire the property.
Receipts confirming that the following have been paid:
Immovable Property Tax
Immovable Property (Town) Tax.
Capital gains tax.
Estate Duty Tax.
Sewerage Board Tax.
Town rate & Communal rate.
People usually give their lawyer power of attorney to attend the District Lands' Office and facilitate completion on their behalf.
At completion, you are required to pay Transfer Fees and in return, the District Lands’ Office issues a Title Deed bearing your name as the property’s legal, registered owner. At the time of writing, the fees are as follows:
3% - on the first € 85,430
5% - on the next € 85,430
8% - on the remainder
So for a home costing € 200,000, the Transfer Fees would be € 9,165.60; for a home costing € 400,000, the Transfer Fees would be € 25,165.60.
Buying in joint names
If your Contract of Sale is in joint names (e.g. a husband and wife), the Property Transfer Fees are calculated as if you'd both bought a property of half the value.
So, for a home costing € 200,000 in joint names, the husband and wife would each pay € 3,291.40 making the total Property Transfer Fees payable € 6,582.80.
You can calculate your property transfer fees online by visiting the Cyprus Department of Lands and Surveys - Transfer Fees Calculator.
In the words of Professor Dr. Andonis Vassiliades, Professor of Law, Criminology & Penal Justice and a Legal Consultant when talking about completion: “the end result is sure and satisfying. You leave the Land Registry Office knowing full well that the property is now yours. You own that property!”
Open that bottle of champagne - time to celebrate!
Note: The Land Registry Office uses the market value of the property at the date of your agreement to calculate the Property Transfer Fee; this may or may not be the same as the price you paid for it.
If the Director of the Department of Lands & Surveys considers that the price you paid was below the property’s market value at the date of the agreement, he will determine the market value on which the fees are payable.
Once you have paid the transfer fees, you may apply to the Supreme Court to contest the Director’s decision.