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Information for Cyprus Expats on the process for coneyancing and due diligence in Cyprus
Vouni Village House
One of the issues that people face when buying real estate in Cyprus is that there appears to be no defined tasks that a lawyer is required to undertake when conveyancing property, which may lead to severe complications for the buyer at a later date.
CONVEYANCING is the act of transferring the legal title in a property from one person to another. This involves lawyers representing the purchaser and the vendor carrying out the legal work required, which entails checking the title and other matters concerning the property, making enquiries on behalf of the purchaser, drafting contracts, etc.
The conveyancing process culminates in completion (readers from Scotland will know this as settlement), at which time the transfer of legal title (ownership) of the property from the vendor to the buyer takes place together with the transfer of the legal rights and obligations associated with the property.
In Cyprus, completion occurs when the purchaser pays the Property Transfer Fees to the Land Registry. Shortly after, the Land Registry will issue them with a printed Title Deed bearing their name as the legal, registered owner of the property they have purchased.
Due diligence
In many countries, lawyers acting on behalf of those buying property carry out due diligence as part of the conveyancing process automatically – i.e. without being specifically instructed to do so. They will carry out title searches, local authority searches – and make enquiries concerning planning permissions, planning proposals, road schemes, etc. and all the other tasks required to protect the interests of their client.
In Cyprus, however, there appears to be no defined tasks that a lawyer is required to undertake when conveyancing a property; consequently, due diligence can be somewhat of a hit and miss affair. Some lawyers fail to carry out even the most basic of checks, which may result in severe complications and difficulties for those whose interests they are being paid to protect.
It is therefore essential that those buying property ensure that their lawyer carries out the required tasks to safeguard their interests. They should also ensure that their lawyer confirms all the information and advice they provide in writing so that there can be no dispute about what has been said and what has been agreed at a later date – and they should keep a file of correspondence together with detailed records of emails and telephone conversations.
How can a lawyer help?
When buying property in Cyprus, a lawyer should, as a minimum:
For all types of property
Confirm that the person selling the property is its legal, registered owner.
Confirm that the property is free from any claims/encumbrances (such as a mortgage) and prohibitions. If the lawyer finds any encumbrances or prohibitions, they should advise their client of the risks they present and possible steps that may be taken to protect their interests.
Confirm that the vendor is in a position to deliver title of the property.
Ensure there is free and legal access to the property from a public highway.
Deal with their obligations to pay property taxes in a fair manner.
Draft and finalise the legal contracts.
Arrange for the payment of Stamp Duty and the stamping of the contact at the tax office.
Deposit the signed contract at the Land Registry for Specific Performance. (Note that under the new Specific Performance Law, the vendor may also deposit the contract).
Ensure that the vendor pays any taxes due by him, thereby ensuring that a tax clearance certificate will be issued.
Check that the property is not affected by town planning proposal. Obtaining a formal written statement from a planning authority in Cyprus 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 should also advise clients about the zoning of the area, the building coverage and density, but not if a neighbour has applied for permission to set up a goat farm! And as the zoning may change at a later date, a lawyer will be unable to offer any guarantees on this aspect of a purchase.
Facilitate the transfer of ownership of the property from the vendor to their client and the payment of Property Transfer Fees.
For ‘off-plan’ property (property that is bought before it’s been built or during construction)
Establish the credentials and credit worthiness of the developer.
Confirm that the necessary Town Planning Permission and Building Permits have been issued for the construction of the property.
For resale property
Ensure that the property is shown on the Title Deed.
Obtain a structural survey and professional opinion on the asking price from a RICS surveyor.
For land
Establish the precise location of the land.
Establish that the land may be used for the client’s intended purpose. As planning applications can only be submitted by the legal registered owner of the land, all that can be expected is an informal, non-binding, off-the-record comment from one of the planning officers.
Obtain a survey of the land to assess its suitability for the client’s intended purpose.
For properties sharing common facilities such as entrance halls, stairways, exterior walls, swimming pool, tennis courts, gardens, etc.
Determine whether the required committee for the management of the common areas has been established.
Draft and finalise the legal contracts associated with the payment of management fees and insurance of the common facilities. (This only applies to resale property as there cannot be a management committee for properties that do not exist. For off-plan purchases, provision should be made for the establishment of such a committee with responsibility for common areas resting with the developer until such time as the committee is formed).
© Cyprus Property News
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