Conveyancing is the act of transferring the legal title of a property from one person to another. The process of conveyancing in Cyprus is rather complex as it involves a series of steps and documents to be submitted. Legal representation is necessary for both sides, the purchaser and the vendor, when carrying out the legal actions, such as checking the title and other matters concerning the property, making enquiries on behalf of the purchaser or drafting contracts.
The system of conveyancing is designed to ensure that the potential buyers obtain legal titles for immovable property and all the rights associated therein, as well as being notified of any restrictions upon the property. Records of land registration are held by the Land Registry of Cyprus and it assures buyers that the land that they are receiving is of a good title. It is worth noting that the conveyance process is the same whether the land you intend to purchase is a plot of land, a resale property or a new property off-plan from a property developer.
The Conveyancing Process in Cyprus
Initially, the vendor makes an offer to sell a property and when a potential buyer is interested in purchasing it, the vendor’s lawyer draws up a contract for sale to reserve the property. The buyer’s lawyer reviews the contract of sale and makes the necessary amendments on behalf of the buyer’s interests. Once both parties are satisfied with the conditions, they sign the contract and it takes immediate effect.
2. Title Search
After the contract is signed, the buyer’s lawyer conducts a title search at the District Lands Office, to ascertain whether the property in question is actually owned by the person trying to sell it and check whether there is a mortgage or any other claims lodged against it. In case there is a mortgage, the buyer may pay an agreed proportion of that mortgage to the mortgagee, who is usually a bank, and the contract of sale, having duly lodged at the Land Registry, will take precedence over the mortgage. There is a risk losing everything if not repaying a proportion of any mortgage on the property.
3. Plan Search
The buyer’s lawyer may also carry out a plan search at the Town Planning office to establish whether there are any developments in the pipeline near the area of the property. There is only the option of an informal, non-binding, off-the-record comment from one of the officers; no formal written statement from the planning authority is possible. The lawyer may be able to advise the buyer about the zoning of the area and the building capacity of the area. Nevertheless, there are no guarantees, as the zoning may change.
4. Planning Permission & Building Permit
Building a property without the Planning and Building Permit is illegal in Cyprus. Thus, the buyer’s lawyer may check with the authorities that Planning Permission & Building Permits for its construction have been issued – even if the Title Deed for the property to be bought has not been issued yet. It is advisable for the purchasers to put their stage and other payments in escrow to protect their interests, until such time as the vendor presents the required permits and approved plans to an escrow agent.
Conveyancing is the act of the legal transfer of a title of a property from one person to another.
5. Stamp Duty
Once all parties have signed the contract of sale, four copies are made and stamped at the District Lands Office. The one document is stamped as the ‘original’ and is kept by the buyer’s lawyer, while the remaining copies are stamped with a Revenue Stamp and certified as being true copies of the original.
The stamp duty is paid by the buyer’s lawyer when the contract is signed in accordance with the following rates:
- 0% of the first €5000 of the purchase price;
- 0.15% of €5001 – €170,000 of the purchase price;
- 0.20% for any amount over €170,000.
6. Deposit Contract of Sale
The buyer’s lawyer must deposit a copy of the contract of sale at the District Lands Office for ‘Specific Performance’ within 6 months of the signing date; this protects the interests of buyers from wrongdoings by the sellers. Thus, once the construct of sale is deposited at the Land Registry, the purchaser has the right to exercise all legal property rights (e.g. to sell, rent, gift or mortgage the property) even before the Title Deed is issued.
7. Taking Possession of the Property
As soon as the obligations stated in the contract of the vendor and the buyer are fulfilled, the buyer can take possession of the property. However, they still do not own the property until the ‘completion’ stage.
8. Completion of conveyancing
Completion occurs when the sale of the property is finalised, and the purchaser becomes the legal owner of the house or flat. Unfortunately, it may take years or decades in Cyprus to reach completion, due to the delay of issuing the Title Deeds. The completion can only take place when the Title Deed for a property is available. Developers say ‘completion’ to indicate the date on which buyers take delivery of a property, which is different from the legal completion.
The staff at the District Lands Office need the following information to make the transfer of property:
- A completed Form N270 – ‘Declaration of Transfer of Immovable Property’
- The relevant Title Deed being transferred
- A completed Form N313
- For EU citizens, passport
- For non-EU citizens, a certified copy of the Council of Ministers’ permission to acquire the property
- Receipts confirming that the following have been paid:
- Immovable Property Tax
- Immovable Property (Town) Tax
- Capital Gains Tax
- Estate Duty Tax
- Sewerage Board Tax
- Town Rate & Communal Rate
The system of conveyancing is designed to ensure that the potential buyers obtain legal titles for immovable property and all the rights associated therein, as well as being notified of any restrictions upon the property
The rates for Immovable Property Tax, which every registered owner is liable to pay annually, are the followings:
- Up to €40,000 – 0.60%
- €40,001 – €120,000 – 0.80%
- €120,001 – €170,000 – 0.90%
- €170,001 – €300,000 – 1.10%
- €300,001 – €500,000 – 1.30%
- €500,001 – €800,000 – 1.50%
- €800,001 – €3,000,000 – 1.70%
- Over €3,000,001 – 1.90%
9. Property Transfer Fees
At the completion of the conveyancing process, the buyer is required to pay the following transfer fees and in return, the District Lands Office issues a Title Deed with the name of the buyer as the legal, registered owner:
- 3% on the purchase price up to €85,000
- 5% on the purchase price from €85,001 to €170,000
- 8% on the remainder of the purchase price over €170,000
It is common practice for the lawyers to act on behalf of their clients, who wish to purchase property, carrying out due diligence as part of the conveyancing process automatically, without being specifically instructed to do so.
In Cyprus, as it appears there are no defined tasks that a lawyer is required to undertake when conveying a property. Consequently, some may fail to carry out all the necessary checks, resulting in severe complications and difficulties for their client’s interests.
It is, therefore, imperative for the clients to ensure that all the required tasks are carried out and that their lawyer confirms all the information and advice they provide in writing, to avoid any disputes about what has been said and agreed later on.
- When the contract of sale is in joint names, usually between a husband and a wife, the Property Transfer Fees are calculated as if they both bought a property of half the value.
- It is a good idea to include a contract clause stating that the last payment will take place upon possession.
- When buying a flat in a complex, it is practical to determine exactly how much you would have to pay for communal expenses.
- If the vendor is a company, it is advised to conduct a company search to assess the financial credibility of the vendor.
Our legal team will help you with conveyancing and advise you on all legal aspects of selling or buying any kind of property. Email to us at [email protected]