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The problems with title deeds is well known and because of Troika’s pressure the government has introduced a couple of interesting laws in order to bypass the problems, so that the deeds are issued at a faster rate, whereas blocked property due to bad mortgages and outstanding taxes, are now bypassed.
In effect the new legislation stipulates that if a property is bought and the contract of sales deposited prior to 31.12.2014, a free transfer (of mortgages) can take place provided that the buyers do not owe any amount to the seller they paid at least 80% of the sales price with the 20% balance to be deposited at the Land Registry Office special account.
(Just as a note the Director of Land & Surveys stated that purchasers can apply even when the sales contract has not been deposited by 31.12.2014 but a court order is required).
Also, in case of inexcusable delays for the issue of titles by the seller the buyer can apply to the Land Registry Office to have the titles issued if there are no problems of permits etc.
The deeds will be issued in the name of the registered owner however and not the buyer. Once issued the buyer can apply for a direct transfer. There still remains legal issues regarding the blocking of transfers, but it is expected that this problem will be by-passed.
Another benefit is that properties which are bought post 31.12.2016 no transfer fees will be paid if VAT is applicable/paid and if no VAT a 50% discount is made.
All this is good news giving some piece of mind to trapped buyers.
Having said this, properties sold and titles available, but the buyers are not interested in a transfer (payment of transfer fees, balance of purchase price etc) the seller can apply to the Land Registry and have the property transferred to the buyer (with the property being charged for the cost).
This is a benefit to the seller since the registered owner/seller is liable for the payment of Municipal and other taxes, be it that they can pass them on the buyer.
In various cases the authorities will not allow other properties of the seller to be transferred if a particular property is burdened with its taxes, notwithstanding the liability of the buyer.
The mistakes of the past have taught us many lessons and these new laws do not mean that one should do without the required due diligence by the prospective buyers. Part of the wrongdoings are the buyer’s fault, part by the estate agents and the advocates (not doing their job right) and of course part by the sellers-developers and others.
Our suggestion regarding buy real estate is as follows:
- Appoint a knowledgeable advocate to handle your sale/acquisition (there are some who do not do the job properly, whereas others charge the earth for a simple sales contract). An ordinary house contract should not cost more than €1,000 + VAT.
- The advocate should do his due diligence on the buyer’s behalf by checking if the property is mortgaged (not a major problem as such if a mortgage release is secured), check if any taxes are due (the seller’s responsibility up to the signing of the contract and get a release up to that date).
- Do not be encouraged by the seller for under-declaring the sales price which you will be told that the transfer fees for which you are liable will be reduced to your benefit. Not only is it illegal, but in the event of a resale you will be charged more, since capital gains is charged on the difference between your declared acquisition price and sales price. Not worth it especially now with the reduced transfer fees.
- Check town planning zones, building permit, any future/proposed schemes, town planning requirements (by the agent/or your advocate).
- Something which is needed is to check the common expenses charges and whether there is in place an administrative committee to manage the project – Non-payment of common expenses causing units/projects to get rundown – hence empty pools, gardens with weeds etc.
- Check the physical state of the building and ascertain from the management committee any long outstanding problems (based on our experience the non-payment of common expenses is a “curse” we say). Do not compare your own particular country regulations to the ones in
Cyprus. - Check what are the common charges, the property tax etc p.a. so that you know (not much but an indicative figure is recommended) – Some projects have charges of over €1,000 p.a. referring mainly to the recent high-end properties.
We hope that we are now all wiser and that the mistakes of the past will not be repeated – or at least will be reduced in numbers, upgrading the standard of real estate in Cyprus and encouraging the market further.
