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Paying in Instalments
By Louise Zambartas
When a person purchases an off plan new build property from a developer in Cyprus it is most often the case that the purchase price will be paid to the developer in instalments. The exact structure under which payment will be made will vary tremendously from developer to developer and according to the stage of construction that the property has already reached. A “normal” structure might be considered to be a large percentage paid on signing the purchase agreement (perhaps 30%), further smaller instalments paid according to progress and finally a payment made upon completion of the property. There are a number of pitfalls of which unsuspecting buyers can fall foul when agreeing to the payment structures and hopefully you can avoid them by taking care when agreeing the stage payments.
Making Sure You Can Pay
The most important thing to appreciate when negotiating and agreeing to purchase terms and particularly the instalments which apply is that once you have signed
the contract you are bound by its terms. The Cypriot law does not allow for a “cooling off” period as in some other jurisdictions. For this reason you should be careful when you sign the sales agreement that you are realistic with the payments you are able to make and that includes making sure that you have a mortgage offer in place. A prudent lawyer will try to negotiate and include in the contract a “period of grace” to apply to the stage payments which you are due to make in order to allow for minor delays beyond your control. Whether such periods of grace are accepted will vary from developer to developer.
Making Payment By Reference To Progress
It is very important to ensure that the manner in which instalments are paid is clear in the contract of sale. A major pitfall is to agree to payment by reference to certain dates as opposed to payment by reference to actual progress. In the former case, contractually payment will need to be made regardless of whether the developer has actually started or made any progress with the building. In the latter case payment will only be made according to progress and in this way you can ensure that your property is developing in accordance with the plans and is on track for timely delivery prior to paying each instalment.
Ensuring That Satisfactory Progress Is Made
Only an expert can really say whether certain stages in the building process have been made and therefore an architect or civil engineer should be named in the contract as responsible for issuing a certificate to state that each stage has been reached.
Avoiding Hidden Charges
In the case of a property purchased with the assistance of a mortgage, then the certificate demonstrating progress will be forwarded to the bank for payment to be authorised. You should note that in the case where the bank queries whether such progress has actually been made, they may insist upon sending their own civil engineer to check the progress. The charge for such a check may be charged to the customer and therefore it is always worth checking the bank’s policy in this regard before you sign the mortgage policy.
Conclusion
It is common practise to purchase a new build property by making payments in instalments. You should ensure that the contract of sale is carefully checked by a lawyer in order to ensure that payments are agreed to be made according to fair progress and upon release of an expert certificate stating that certain progress is made.
© Louise Zambartas
If you would like to have more information, our Cyprus Expat Legal Services team are here to help you. Please use our Contact Form and quote ref Legal Services. A member of the team will contact you and be at your service.
