Areas of Practice

We are your Cyprus Property Lawyer – D. Hadjinestoros & Co LLC

We are the Cyprus Property Lawyer you can trust as we have served a wide variety of clients, local and international, individual and corporate and have advised them on all matters relating to Property Law.

Our areas of work include among others, rental agreements, license agreement, leases, mortgages, drafting and advising on reservation of property agreements, purchase and sale agreements and registration of their contracts at the land registry for the purposes of specific performance. We also advise and act on behalf of clients at the Land Registry in order to assure that our clients receive unencumbered title deeds and our work has often involved helping clients and advising them on loans provided by banks to facilitate the purchase of property.

We don’t only advise on Cyprus Property Law, but we also serve as property lawyers for the administration and management of properties for clients in Cyprus who are resident abroad.

Key People

Seven factors to consider before Buying Property in Cyprus

1

Perform a Search at the Land Registry

After deciding to buy property in Cyprus, the first thing for the purchaser (or the Cyprus Property Lawyer) to do is visit the Land Registry and perform a search as to whether the property is subject to any charge.

There are many obstacles which make it impossible to transfer good title to real property. A charge constitutes a direct claim or liability on the property under the laws in Cyprus and these are called encumbrances. A mortgage for example, is one kind of such encumbrance. Another type of charge is a Prohibition, which is directed against a specific natural or legal person. It prohibits the transfer or mortgaging of all or part of his real estate.

The most common encumbrances are the following:

• Mortgages
• Registration of a court judgement (also known as a “Memo”)
• Property Sale Order (known as “Writ”)
• A Sale Contract filed at the Land Registry for the purpose of specific performance.
• Conditional Charge from the Registrar of Cooperative Companies.
• Judgement or decree for the modification or cancellation of the registration of the property.
• Court Judgement or Decree for the sale of mortgaged property.

The most common Prohibitions are the following:

• An interim Court Order prohibiting the registered owner of the property from alienating or encumbering it.
• A Court order appointing a guarding.
• A Court order declaring that a natural person is “incapable”
• A provisional court order for the appointment of a Trustee in Bankruptcy.
• A provisional court order for the appointment of a liquidator.

2

Decide whether to proceed with buying an encumbered property

In case the property is encumbered (for example if it is mortgaged), the buyer should compare the value of the property vis-à-vis the part/value of the property which is encumbered. In such a case, the purchaser should agree with the seller to pay any amounts due on the property (for example the amounts owed to the mortgagee /lender) and deduct the amounts paid from the sale price. Of course the mortgagee/lender, should at this stage be involved in order to make sure that they agree with the arrangement. This will ensure that the buyer will receive an unencumbered title to the property. Note that in case the purchaser has already purchased property which is encumbered, and the contract was deposited at the land registry, the purchaser has the right to make payments of amounts due to the property owner, directly to the mortgagee.

Appointing a Property lawyer in Cyprus is important at this stage. It is beneficial if many of the above arrangements are put in writing so that both the seller and the mortgagee/lender agree to them. At D. Hadjinestoros & Co LLC we can assist you with drafting and executing the agreement with the Seller and we can further make all necessary arrangements with the mortgagees/lenders in order for them to remove the encumbrance.

4

Matters that the Cyprus Property Lawyer should include in the Contract

For most Property Lawyers in Cyprus with experience in real estate transactions, the drafting and perusing of a contract is relatively straight forward. However, it is imperative that every Sale contract includes the following terms:

The full description of the property or part which the purchaser will buy (in case the property is part of a structure of another plot) and also the architectural plans/real estate plans, which specify the section of the property or planning permits.

The purchase price of the property.

The date of delivery of possession of the property.

In case of construction contracts, terms as to the time of concluding the building as well as terms relating to damages in case of delay should always be included. Furthermore, a snagging clause as well as a clause guaranteeing title deeds are also essential. For this purpose an amount out of the sale price should be paid only upon the delivery of title deeds to the property.

The fact that the seller is guaranteeing free and unencumbered possession.

Any payments to be made by the Purchaser/Seller to third parties (such as lenders).

 The full set of obligations of the seller as well as the purchaser.

The list is not exhaustive and prior to drafting or perusing the Sale Contract, your Cyprus property lawyer will have to inquire with the seller and request a land registry search (as described above). Then they should make sure that they include in the contract the above provisions.

5

Depositing the Sale Contract with the Land Registry

The deposition of the Sale Contract at the Land Registry serves a very legitimate purpose. The seller of the property will be unable to double sell the property given that no Purchaser will buy a property if from a search at the Land Registry it is obvious that the property is subject to another sale. Given that the second Purchaser will have knowledge of the first sale (as it will be registered as deposited at the Land Registry) they will not proceed with buying the property. Furthermore, in case the contract is deposited with the Land Registry the Purchaser has the right to apply to the court to have the title deeds transferred to him in case the seller does not perform his/her contractual obligations.

After the signing of the Sales Agreement and after all stamp duties have been paid, the Purchaser must submit it to the Land Registry of the District where the property is located. Although the Law sets a 6-month deadline for submitting the contract from its signing, any delay may allow another encumbrance to be deposited during that time which would mean that the purchaser’s right may become subservient to the new encumbrance.

We can act as your Cyprus Property Lawyer to complete your property transaction. We can also assist you with any other legal obligations such as the payment of Stamp Duties, depositing the contract at the land registry and, in case you are living abroad, prepare a Power of Attorney to act on your behalf for any other matter.

6

Payment of Taxes by the Seller prior to the transfer of the Title deeds to the Purchaser

In order to be able transfer the title deeds to the property in the name of the Purchaser, the Cyprus Property Lawyer should ensure that the following taxes have been paid:

Property Tax (this has now been abolished, however it may relate to property tax owed by the previous owner during the past years when such a tax was existent)

Capital Gains Tax. the Tax Department will grant a tax clearance which the Seller presents to the Land Registry. In order to obtain the clearance, the Seller completes specific forms and submits them to the Tax Department. The capital gains tax is currently 20% on the value of the gains of the property subject to specific deductions.

Municipality Taxes.

7

Payment of Property Transfer Fees by the Purchaser

Even though the seller is responsible for the payment of property, capital gains and municipality taxes, it is the purchaser who is responsible to pay the transfer fees. The transfer fees are currently payable at 50% of the following rates depending on the value of the property:

We note that there is a total exemption from transfer fees in case the transaction is subject to VAT (for example a newbuilt).

This information does not constitute legal advice. For a free, confidential consultation with a specialist in this area you can contact us to arrange an appointment by phone or email.