Cyprus Property Buyers - Stark New Warnings but No Need to Worry
It came out publicly rather suddenly in a phone in programme on CyBC (Cyprus Broadcasting Corporation) Radio 2 on 16 November 2006.
There are various maxims which lull property investors in Cyprus into a false sense of security with statements, for example, like the Laws of Cyprus are very similar to the UK.
There are similarities, for example, in terms of the principles of the law of contract and there is a Land Registry but that is as far as it goes.
Hopefully you hire a good independent lawyer but sometimes buyers find someone who is just not good enough and many do not have indemnity insurance either if it all goes wrong.
The other maxim is that once your Contract for Sale has been stamped within 30 days and lodged by your lawyer with the Land Registry you are safe under the principle of Specific Performance. It is a legal device, unique to Cyprus, which requires the vendor to deliver the title deeds to a purchaser. Eventually that is.
Unfortunately due to the vast number of land and property transactions that have taken place in the property boom in Cyprus over the last 5 years the authorities cannot cope with the need to split land into divisions relating to one dwelling and there are delays of 2/3 years and even longer; sometimes never ending.
The first jeopardy is a first mortgage to a bank for either the purchase of the land by the developer or to finance the building. If your lawyer does the searches and the Land Registry can reply quickly, if it is not also snowed under as well, then if you discover a mortgage then you can insist that it is removed before you sign a contract. Then your lawyer registers your Contract for Sale within 60 days.
But then it appears that it is perfectly legal in Cyprus Law for the vendor to go back to the bank and get another mortgage on the land because technically the vendor still owns it because the title has yet to be transferred!! But there is no need to worry.
That ranks AFTER your Contract for Sale and whilst there are concerns that any sale procceds over and above the amount stated in the Contract for Sale are swallowed up by the subsequent mortgage, this is NOT SO according to a leading Cypriot Lawyer who I have consulted. You keep all the sale proceeds. Barring tax and fees, of course !!
But there are solutions if you want to keep clear of any uncertainty.
Make sure there is NO clause like this in your contract;
"also the vendor has the right to mortgage the above plot but he has the responsibility to release the flat from any mortgage when the title deeds will be ready"
But rather one which precludes further mortgages under penalty !! Yes I am serious. That should stop it
Best thing is to insist on buying the land first and get concurrent delivery of the Title Deeds if you are buying offplan or if a resale that title will be transferred to you with title deeds on your purchase. You have been warned.
Related Tags: property, mortgage, bank, purchase, legal, sale, land, lawyer, years, cyprus, contract, vendor, title, deeds
John Mason is the owner and author of http://downtoearthcyprus.net This is the site of The Cyprus Property and Finance Information Centre and it provides all you need to know about property purchase and finance in Cyprus including Free Hot Cyprus Property Tips.
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