Pittadjis - Approval by the Government to acquire Immovable Property
February 23, 2009
Approval by the Government to acquire Immovable Property
Under current legislation in Cyprus it is necessary for any non-Cypriots who are not E.U. Citizens or permanent residents of Cyprus who intend to purchase in Cyprus, to obtain approval of Acquisition of immovable property from the Council of Ministers. This application can take around 2-3 months to be received and generally in order for the permission of acquisition to be granted, the following documentation is required by the Council of Ministers:
• A duly completed Application form;
• A bank statement/bank reference to
confirm the financial means of the applicant;
• A character reference by a person in authority to confirm the applicant’s good character and/or a certificate from the applicant’s country of origin to confirm that the applicant has no Criminal record; and
• Purchase contract to confirm the details regarding the property which is being purchased.
EU citizens who do not permanently reside in Cyprus will only be given permission to acquire 1 property. The acquisition of a building plot or land is unlimited. The procedure referred to above is based on current legislation and will cease around 2009 whereupon all citizens of the E.U. will be treated equally with Cyprus citizens regardless of their residential status.
FOTOS PITTADJIS
Pittadjis - Transfer Fees
February 20, 2009
At the time when the Title Deeds are ready to be
transferred to a purchaser, it is necessary for the purchaser
to pay transfer fees. The Transfer Fees are calculated according
to the property’s net value as at the date of the
contracts. The level of Transfer Fees are as follows:
0 - €854,30 @ 3%
€85,430- €170,860 @ 5%
€170,860 + @ 8%
Example 1
The Purchase Price of a property is €260,000.00 euro, the
buyer will pay approximately €13,964.70 euro as follows:
First €85,430 @ 3% = €2,562.90
Next €85,430 @ 5% = €4,271.50
And €85,430 @ 8% = €7,131.20
€13,964.70
However, if a property has been
bought by more than one person, the
Transfer Fees will be reduced and will
be assessed on the number of buyers
of the property. Based on the
purchase price of €260,00.00 and on
the basis that the property has been
bought by two persons, the following
figures will apply:
Example 2
The Purchase Price of a property is
€260,00 ÷ 2 = €130,00.00 paid by each
buyer.
First €85,430 @ 3% = €2,562.90
And €44,570 @ 5% = €2,228.50
(per person) €4,791.40
Multiplied by 2
Therefore Total €9,582.80
Other Matters to be taken into consideration when buying a property in Cyprus
February 19, 2009
A. Stamps of the Contract
In terms of formalities, before a buyer can lodge his/her
contract at the L.R.O. the purchase contract needs to be
stamped. This is a government levy and the rate of the
stamp duty is as follows:
• 0.15% of the value of the property up to €170,860.00 euro
• 0.20% of the value of the property over €170,860.00 euro.
Example:
The contract price is €190,000.00 euro.
• The first €170,860.00 euro @ 0.15% = €257
• The remaining €19,140.00 euro @ 0.20 = €38
€295
It is imperative that the purchase contract is stamped at the
revenue office within 30 days of the contract having been
signed. In the event that the purchase contract is not
stamped within 30 days period, the Stamp Duty plus a fine
will be payable when the contract of sale is produced to
the LRO for the transfer of the Title Deeds.
FOTOS PITTADJIS
Resale properties with Title Deeds
February 19, 2009
3 | Resale properties with Title Deeds
This scenario is where there is a sale by an owner of a
property directly to a buyer. A separate Title Deed has
already been issued and therefore the only two parties
which need to be involved in the sale are the Seller and the
Buyer.
In order for this sale to proceed it is necessary for the
following to be in place:
• A contract between the two parties defining the
property being sold and bought and the price for the
property;
• A Tax Clearance Certificate from the seller to confirm that
any Capital Gains Taxes and Immovable Property Tax have
been paid;
• Confirmation that the buyer has received his permission
of acquisition from the Council of Ministers;
FOTOS PITTADJIS
Resale properties without Title Deeds
February 18, 2009
2 | Resale properties without
Title Deeds
It is possible to sell/buy a property in
the absence of the separate Title
Deeds having been issued. A buyer
may be purchasing a property from a
seller who has bought a property and
who has had his/her contract lodged
at the L.R.O. but who has still has not
received his/her separate Title Deeds.
In such a case, it will be necessary to
request the original vendor i.e. the
owner of the land upon which the
property has been constructed to
sign the necessary resale documentation
/contracts so as to enable the
new purchaser’s contract to be
successfully lodged at the L.R.O. for
Specific Performance purposes.
The original vendor will also need to sign Cancellation
documents to cancel the first contract to enable this to be
withdrawn from the L.R.O. so as the new contract with the
new buyer can be lodged at the L.R.O. in its place.
This method of a resale where a separate Title Deed has
not yet been issued, is the preferred method to be
adopted. It ensures that the buyer remains ‘first in line’ to
receive the title deeds as and when these are ready.
However, sometimes the method referred to above
cannot be followed because the original
vendor/developer refuses to sign the cancellation
documents and a fresh direct contract with the new buyer.
Such refusal though does not prevent the sale of the
property. The property may be sold by a contract which is
quite valid. However, if the contract cannot be filed at the
L.R.O., possession and use must be given in any event. The
problem in such a case is that when deeds are issued they
must pass firstly to the first purchaser and then the first
purchaser must transfer the deeds to the person he or she
resold to.
FOTOS PITTADJIS
Procedure and Costs involved
February 17, 2009
Buying a property abroad
can be a very satisfying but at the same time
a difficult decision to make
and it is therefore imperative that the proper
legal advice and the correct guidance is obtained
before making this decision.
1 | New Properties
The main difference with buying a
property “off plan” in Cyprus or being
a first time buyer of a property in
Cyprus in comparison to many other
European Countries is that there is not
an automatic issue of Title Deeds as
soon as the property has been
completed and delivered to a buyer.
In some European countries a
separate Title Deed for an individual
house or apartment is given to the
buyer very soon after they have
completed the purchase of their
property. In Cyprus, however, a
Developer/Seller has to apply to the
Cypriot Government for the Deeds to
be issued to a buyer. However, the
Developer/Seller cannot make this
application to the Government
Authorities until he has completed
building the whole project and has
sold all the properties within the
project.
Hence, on an average size project, a
reasonable timescale for the Deeds to
be issued, would be around six years
from the date of delivery of the
property to a buyer. In order for a
buyer’s interest in their purchase to be
safeguarded until the Title Deeds are
issued, each buyer’s purchase
contract is lodged at the Land
Registry Office (L.R.O.) for specific
performance purposes. The L.R.O.
provides a receipt to confirm the
purchase contract has been lodged
at the L.R.O. and this receipt remains
on the L.R.O.’s records until the Deeds
are issued to the buyer or until the
buyer withdraws his contract from
the L.R.O. in the event of the sale of
the property before the deeds are
issued.
By having the purchase contract
deposited at the L.R.O., the buyer not
only secures his/her interest in the
property, but he/she also prevents
the owner of land/vendor from
transferring the property to a third
party without his/her knowledge.
Further, the buyer is given the right to
seek Specific Performance of his/her
contract terms.
In simple terms this means the buyer
can compel the seller to specifically
perform something which he agreed
to do and which is confirmed he
would do within the contract.
FOTOS PITTADJIS
Cyprus History
February 16, 2009
Cyprus being among the three continents of the ancient world Europe,
Africa and Asia, had the tragic destiny and simultaneously
the privilege to have known (besides the far eastern),
all the civilizations and super powers of the world.
The Assyrians, the Egyptians, the Persians, the Greeks, the Romans,
the Byzantines, the Ottoman Turks and finally the British.
Each one of them while in Cyprus applied their own laws. So did the British.
They came to Cyprus in 1879. The British ruled Cyprus until 1960 when Cyprus was declared as an independent state. During their stay in Cyprus, the British replaced all previous laws with the codified Common Law.
When Cyprus gained independence it retained by its constitution all existing laws imposed by the British. So today along with England we are the only European Union State to apply the English Legal System. The British, although conquerors, helped the island a lot especially in organizing the government, establishing the rule of Law and the administration of justice in civil matters.
In 1910 a visionary army officer, lieutenant Kitchener who later became Lord Kitchener organised a Land Registration System for which generations to come must be grateful to him. He made demarcation of the whole island and mapped and numbered each individual holding.
He created the Land Registry Office and these maps are kept as official documents showing the shape, extent and boundaries of each piece of land and a separate registry giving particulars officially as to who the owner is of a piece of land.
Registered owners of land besides clerical or human errors that can be proved, are the absolute and undisputable owners of each specific piece of land for eternity. Any transaction affecting the rights to any land must be done at the Land Registry Office, like transferring of the title deeds, mortgages, rights of ways etc. When buildings are erected on a piece of land these buildings should be registered.
If more than one building is erected like two houses or a block of flats and the owner of the land for some reason (eg. Developers who sell) wants to have separate title deeds for each house or flat, a division permit is obtained from the appropriate administrative authority and then after application, the Land Registry Office issues separate deeds for each individual house or flat.
After that the holder of the new entity house or flat may mortgage it or transfer it or dispose it by any means as a separate real estate entity. Before that is done anybody who buys such house or flat until separate title is issued is the contractual and equitable owner of the house or flat and can dispose of it only by contract and not by registration.
Although we should be grateful to the young army officer for the certainty, security and safety he established for real estate in Cyprus, we pay some price for this.
Anybody who buys a house or a flat without deeds that is the case always for such properties newly built or under construction has to wait for some years until the time comes to obtain title deeds as the bureaucrats have to meticulously be careful since registration creates concrete rights on land or buildings that may worth millions.
So the British who come here by thousands and buy houses or flats without deeds should either curse or thank their great ancestor and the British Empire.
Fotos Pittadjis