Cyprus is a great choice whether you are considering to purchase a property for relocation, investment, retirement or as a holiday home.
But what are the general steps of choosing and buying real property and how to avoid mistakes? Which steps need to be taken to make a successful purchase? The answers to these questions are provided in our below article.
- Due diligence: A due diligence check shall be performed in order to confirm the property’s status. It is thus essential that a search at the relevant district land office is conducted to find out whether there are any mortgages, encumbrance or liens on the property that the Purchaser intends to buy. It is also essential to obtain a copy of the certificate of registration of the property and site plans, and check, where applicable, the property’s building and planning permit and any final certificates.
- Negotiations and execution of the contract of sale or the assignment agreement: The terms of the contract shall be negotiated and the payment terms and method shall be agreed. The contract or the agreement needs to be then drafted and signed.
- Stamping of the contract of sale or the assignment agreement: The contracts must be stamped at the relevant Stamp Duty Commissioner within 30 days of the date of execution otherwise, a fine will be imposed. The Contract of Sale needs to be deposited to the Land Registry, within six (6) months from the date of signing and the Assignment Agreement within two (2) months from the date of signing. The law provides that the stamp duty is paid in accordance with the purchase price and on the basis of the following rules:
- No stamp duty is payable on transactions with consideration of Euro 5,000 or less.
- If the consideration exceeds the amount of Euro 5,000 but does not exceed the amount of Euro 170,000 the stamp duty of Euro 1,50 for every Euro 1,000 or part thereof is payable.
- If the consideration exceeds the amount of Euro 170.000 the stamp duty of Euro 2,00 for every Euro 1,000 or part thereof is payable.
- Submitting the contract of sale or the assignment agreement with the Land Registry: The contract of sale or the assignment agreement needs to be submitted at the relevant Land Registry and this will effectively safeguard the purchaser(s).According to the Sale of Immovable property (Specific Performance) Law, the purchaser of immovable property may secure the remedy of specific performance and therefore transfer the acquired property into his name by submitting a duly signed and stamped copy of the sale of contract at the land registry within six months from the date of its execution.Once this is done, the purchaser’s rights are protected and it provides additional safeguards by blocking the property and consequently not allowing the seller to resell it. No charges, encumbrances or burdens can affect the right of specific performance after the contract has been deposited at the land registry. In the event that the vendor refuses to transfer the property into the purchaser’s name, the purchaser has the right to apply to the court for specific performance of the terms and conditions of the contract and thus order the transfer of the property into his name.
- Application to the Council of Ministers for Non-European Citizens:| In case where the purchaser is a non-European citizen then a specific permission from the Council of Ministers is required to be obtained, before the transfer of the title deeds into the purchaser’s name. This permission is obtained by application to the appropriate district authority and as a general rule, permission is granted to a bona fide applicant, provided that he has no criminal record in his country or in Cyprus and he has the financial means to support himself.
- Transfer of title deeds and payment of transfer fees: The final step upon settling the balance of the purchase price is to transfer the title deed into the purchaser’s name. Both parties need to visit the land registry for the transfer of the property and for the registration and issuance of the new title deeds into the purchaser’s name (provided that individual title deeds have been issued and are available).Real estate transfer tax fees shall be settled by the purchaser in order to transfer freehold ownership into his name. It is noted that the purchaser is liable for the tax payment and the amount is payable to the government at the time of the transfer of the property and the issuing of the title deed into the purchaser’s name.Transfer fees are payable by the purchaser on the basis of the market value of the property at the time of purchase as estimated by the land registry on the actual date of the transfer. The purchase price is indicative of the market value at the time of purchase, but it is not conclusive. Upon transfer of the property and registration in the purchaser’s name, the District Land Registry Office will charge Transfer Fees, which are calculated as follows:
- 3% on any purchase price up to Euro 85,000,
- 5% on any purchase price above Euro 85,000 and
- 8% on any purchase price exceeding Euro 170,000.
If the contract of sale is under joint names, then the purchase value is divided into two parts and is calculated as above for each part separately and then the total sum is multiplied by two. As a result, when there is more than one purchaser on the contract the total amount of transfer fees payable is reduced as if there was only one purchaser on the contract.
It is also worth noting that in case where an off-plan property is purchased, the purchaser may have to wait up to 5 years for the title deeds to be issued (sometimes it might take longer). However, the purchaser can still sell the property, even without the title deeds. The only thing that he cannot do is alter the property in any structural way. However, in order to be able to do that, this right must be included in the original contract of sale.
The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.