When you purchase a property in Cyprus from a developer, your sales contract is deposited with the Cyprus Land Registry and title deeds are issued by the Cyprus Land Registry and transferred to you by the developer – but this takes a considerable amount of time.
Before 2011, selling your property required the co-operation of the developer you bought the property from. As the land registry only held a sales contract between you and the developer (pending issuance of the title deeds), in order to register the new buyer, a new sales contract would require the co-operation of the developer. This caused delays and developers often charged “contract cancellation fees”, an additional expense.
The Cyprus parliament has enacted a new law in 2011. The Sale of Immovable Property (Specific Performance) Law N81 (I) 2011 allows the property owner who does not hold title deeds to pass on all his rights and obligations under his sales contract with the developer to the new buyer, without seeking the permission of the developer.
In order to register the new sale, an assignment agreement, between only the seller and the new buyer must be signed and then filed at the Land Registry, within the time prescribed by the law i.e within 6 months from the date of signing of the assignment agreement. Once it’s filed, all the rights and obligations of the seller are transferred to the new buyer and the developer is bound. The new buyer becomes the new beneficial owner and he obtains the same legal protection that the original purchaser had.
Under this Legislation the new buyer is protected when the title deeds to the property are issued. If, once the title deeds are ready and the developer is refusing to transfer title to the property in the name of the new buyer without relevant cause, then the new buyer can apply to the Cyprus courts and obtain an order for the title deeds to be issued in the name of the new buyer. The law ensures that title will be transferred in the name of the new buyer despite the fact that the developer and the new buyer do not have a contract between themselves. The new Law further allows for courts to impose criminal sanctions upon a developer or vendor in certain circumstances.
Some key points of the new law are noted below:
- Any term in a contract of sale that prevents it from being deposited at the Land Registry is void ab intio (from the beginning).
- A vendor of a property is required to deposit a buyer’s contract of sale at the Land Registry before he encumbers that property with (for example) a mortgage. The Law N81 (I) 2011 is therefore recognising that a buyer has a better right over the property if he has signed a contract of sale as it requires the vendor to deposit that contract before mortgaging the land.
- Should a vendor fail to comply with the above he will have committed a criminal offence and will be liable to a prison sentence of up to two years and/or a fine not exceeding €5,000.
- In circumstances where, a property is sold that is already mortgaged, the buyer may pay a proportion of that mortgage to the mortgagee (usually a bank). The mortgagee is required to accept this – and the buyer’s contract of sale, having been duly lodged at the Land Registry, will take precedence over that mortgage regardless of whether the whole amount of the mortgage has been repaid.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought on your specific circumstances. For further information, please contact the author Mrs Xenia Kasapi at firstname.lastname@example.org / email@example.com