Legal Procedure
The process of buying property in Cyprus is much the same as in the UK. Once you find your dream property, you make an offer on it. You then sign a contract, pay for it, and then sign a Deed of Ownership.
Selecting a Lawyer
You’ll definitely need a lawyer to handle the buying process for you. – we can put you in touch with lawyers who are qualified in Cypriot law, if you haven’t got one already.
Legal Procedure
Doesn’t matter if you’re buying land, off-plan property or a resale property in Cyprus - the same legal procedure applies.
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Once an agreement is reached between the seller and the buyer, a Sale Agreement is drawn up.
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4 copies of the Sale Agreement are made, and all four copies are presented to the District Land Registry Office. One of these copies is stamped with the word ‘Original’ and will be kept by the buyer’s lawyer on the buyer’s behalf. The remaining 3 copies are stamped with a currency stamp and certified as true copies of the original.
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The stamp duty is paid by the buyer or their Power Of Attorney, and one of the copies of the Sale Agreement is registered with the District Land Registry Office for reasons of ‘Specific Performance’ (explained in the next section.)
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One of the copies of the Sale Agreement is given to the mortgage provider if applicable. The final copy of the Sale Agreement is given to the seller.
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The conditions of the agreement are then met and the buyer becomes the owner of the property.
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Once the Title Deeds have been drawn up, all parties, or their lawyers, meet up at the District Land Registry Office to pay the land registration transfer fees, payable by the buyer. This transfers the property from the vendor to the buyer.
Specific Performance
The ‘Law of Specific Performance’ stipulates that once the Sale Agreement is deposited with the District Land Registry Office, and providing that both sides are in a position to effect the transfer, then within 6 months of notification by the buyer to the seller, the seller must effect transfer.
There are two aspects of Specific Performance, both designed to protect the buyer:
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Once the certified true copy of the Sale Agreement is deposited with the District Land Registry, the seller cannot renege on the agreement, or sell it to someone else. This provides protection for the buyer and prevents gazumping.
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Once the Sale Agreement has been registered with the District Land Registry Office, the transfer fees are calculated on the property value on the date that the Sale Agreement was signed.
Buying Off-plan Property in Cyprus: Sale Agreement
The terms and conditions that must be met by the developer will be set out in the Sale Agreement, along with the timing and amount of the various payments which the buyer will need to make. Once the Sale Agreement has been signed by the buyer, it becomes legally binding; there is no cooling off period.
Buying Off-plan Property in Cyprus: Stage of payments
The deposit is normally payable on signing the Sale Agreement, and developers will usually seek 20%-30% of the sale price for the initial payment.
Once you’ve paid the deposit, a series of payments will be made depending on the development stage. The Sale Agreement will state that the developer must inform you or your lawyer that a particular stage is complete, and that payment for the next stage is due. This would be in the form of a ‘Notice of Completion’ which will be signed either by the architect or site engineer. After service of the notice, you are obliged to pay.
Buying Off-plan Property in Cyprus: Title Deeds
The Title Deeds for off-plan developments can take some time - 3 to 5 years. This is because the legal procedure to split the land from the apartments can only commence once they’ve all been completed.
Buying Resale Property in Cyprus
Buying an existing property is a simple process.
Your lawyer will first check that the Title Deed is correct in its description of the property.
Your lawyer will then receive a draft Sale Agreement from the seller’s lawyer. You can normally expect to pay approximately 10% of the purchase price for the deposit and 90% of the balance when the Title Deeds are transferred.
The cost of Buying a Property in Cyprus
In addition to the purchase price, there are other costs you also need to be aware of when working out your budget.
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Your own lawyer’s fees
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Surveyor’s fees
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VAT is chargeable on a new property if it is not paid by the Developer
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Land Registration fees/Transfer fees cost 3% - 8% depending on the value of the property
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Stamp Duty, payable by the buyer when signing the contract. Rates are 0.15% for the first € 170.860,14 of the purchase price, and 0.2% for the balance.
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Immovable Property Tax: this annual tax is based on the market value of the property as assessed on 1st January 1980. The first 171,000 Euros is exempt; after that the rate of taxation varies between 0 .25% and 0.4%.
Call the Cyprus Property Venture Team
We can put you in touch with independent lawyers in Cyprus if you don’t have one already. And if you have any questions at all about buying a property in Cyprus – give us a call on 0787 789 5880 or 0786 854 5749. |