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Information for Cyprus Expats on depositing your sales contract when purchasing Cyprus property
If you purchase a property and no immediate transfer takes place, the deposit of a sales contract is very important in many respects. Firstly it acts as an impediment on the property and as such the property cannot be disposed by the registered owner to third parties, save by the original buyer. In addition, if the registered owner mortgages etc his property subsequent to your sales contract deposit, the sales contract ranks ahead. So if a bank sells the property and your sales date is ahead of the mortgage, you should be firstly compensated. The deposited sales contract establishes the acquisition date in order to fix the valuation date in the event of transfer and it also exempts a buyer from payment of the property tax if within the €170.000 less value parameters. So if one does not deposit his sales contract, on the account of the property tax, he has a lot to lose.
The new amnesty laws have changed the requirements of the deposited sales contract in order to help the buyers strengthen their position.
The main provisions are as follows:
The new law is to become operational on 8/2011.
Depositing a contract does not restrict itself only to sales contracts, but it includes all sorts of agreements regarding real estate such as sales contracts, exchange, assignment, part exchange, voluntary division etc.
From the 2 months deposit period from the date of signing, it has become extended to 6 months. So when acquiring property you must deposit your sales contract within 6 months from signing. Bear in mind that your contract must be duly stamped. This period of six months can be extended by Court order if it is to the benefit of the buyer.
There cannot be an agreement restricting any party from depositing his contract with the Lands Office.
Existing non deposited sales contract can be deposited within 6 months from 29.4.2011.
A deposited contract acts as an impediment and has a priority with respect to other mortgages/sales contracts/impediments that are subsequent to the deposit date.
The assignment of contracts that can now be deposited, is especially important for the financiers since now they have a direct loan security since the contracts are so assigned for the benefit of the financier by the buyer/ borrower.
Specific performance can be used even if the contract is not deposited at the Lands Office and even when the agreement is verbal – it will depend on the court if it believes it is reasonable to issue such an order and provided the rights of 3rd parties are not affected i.e. where there are prior impediments on the property.
The court upon its decision, may order, in addition to the specific preference any other conditions which may think appropriate and consider such measures so as to secure the issue of separate titles.
A financier (assignee) may also take legal action and require the registration of title on the buyer’s name and the simultaneous repayment of a mortgage.
If one secures a specific performance order but does not apply to the Lands Office to have the order implemented within one year from the court order including the securing of tax releases, then the right is lost – unless the court extends on application, the period.
A seller cannot seek any remedy other than the payment of damages.
So, things are getting better but they have not reached the stage that deeds will be issued speedily and buyers fully protected. There are given remedies and legal action on behalf of the buyers to minimize their risk and as a rough guess we estimate that if due diligence is carried out by the buyers (in many respects by their lawyers) the buyers purchase is more secured now. We write and write all the time since the year 2005 in order to remind buyers on the merits to follow “our 10 Building Commandments” – regarding the acquisition of real estate procedure. At that time some foreign people mocked us for this – but now those who have followed it have little if anything to fear getting hurt from a real estate deal.
© Antonis Loizou, FRICS website
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