Pittadjis - Stage Payments
March 8, 2009
A Civil Engineer’s Certificate
is required to confirm that each stage
has been completed and complies
with the Building Permit.
When purchasing property in Cyprus that is under
construction/off plan, a contract is prepared by your
Solicitor between yourselves and the Vendor/Developer to
safeguard your interests throughout the process, from
construction to completion and delivery of your property.
Sometimes, a Vendor/Developer may not necessarily own
the land upon which he is constructing a property and in
such a case, it is the Solicitors duty to ensure that the
necessary documentation is in place to confirm the
discrepancy with the ownership of the land. To clarify, it is
very common practice in Cyprus for land to be handed
down through generations. Sometimes the owners of
land do not have the means, resources or even the
intention to develop the land that they own. Developers
often approach the land owners and they agree to
develop the land on their behalf. In exchange for the
development of the land, the land owner will be given a
percentage (around 30%) of the building which has been
developed on the land i.e. they will give the land to the
Developer to build upon and in exchange, they will be
given 2 villas/apartments etc. This exchange in Greek is
called an “Antibarohi” (”consideration in kind”). This
agreement is lodged at the Land Registry in order to make
the exchange legal.
Regarding the mode of payment which will be reflected in
the contract, once you have paid your first
instalment/deposit of 30% (sometimes this can be 20%) of
the purchase price of the property, which is normally due
within one month from the signing contracts, your
contract can then be lodged at the Land Registry Office for
specific performance purposes. By the expression “lodged”,
this means that your property is immediately protected
from being sold to another purchaser and from then on
own the property until the issue of the Title Deeds.
A receipt will be issued from the Land Registry to confirm
that the contract has been lodged. The Vendors are
obliged and will do their best to obtain a separate Title
Deed for your property as soon as possible, but this can
sometimes take, roughly 4-8 years.
The stage payments will commence once you have paid
your first instalment, and contracts are lodged at the Land
Registry.
We do request that all payments are effected through the
official channels i.e. bank transfers and if money is brought
in cash, this should be declared at the airport or any port
on arrival.
1 | 30% Deposit to be paid within
one month from signing the contract.
A receipt will then be provided from
the Developer to acknowledge the
said payment.
2 | 20% will be paid upon completion
of the skeleton, subject to the issue of
a Civil Engineer’s Certificate to
confirm that this stage has been
completed and complies with the
Building Permit and the Cyprus
Building Regulations. It is only when
a satisfactory certificate has been
received that we will release this
instalment to the Vendor/Developer.
A receipt will then be provided from
the Developer to acknowledge the
said payment.
3 | 20% will be paid upon completion
of the brickwork and plastering,
subject to the issue of a Civil
Engineer’s Certificate to confirm that
this stage has been completed and
complies with the Building Permit
and the Cyprus Building Regulations.
It is only when a satisfactory
certificate has been received that we
will release this instalment to the
Vendor/Developer. A receipt will
then be provided from the Developer
to acknowledge the said payment.
4 | 20% will be paid upon completion
of the tiling, subject to the issue of a
Civil Engineer’s Certificate to confirm
that this stage has been completed
and complies with the Building
Permit and the Cyprus Building
Regulations.
5 | The final 10% will be paid upon
completion and delivery. The expression
of “completion and delivery” is
meant that all building works are
finished, the property will be cleared
and there will be connection with
electricity and water supply so that
you are able to use and enjoy the
property without any problems.
At this stage of the development, a
final Civil Engineer’s Certificate is
required to confirm that the property
is being completed and complies
with the Building Permit and the
Cyprus Building Regulations.
Once again, we will request from the
Vendor/Developer to provide us a
satisfactory receipt from the Land
Registry Office to confirm that the
entire land upon which the project
has been constructed is free of any
legal charges and encumbrances.
With the final stage payment, once
you have inspected your property
with a representative of the
Vendor/Developer and you are happy
that the property has been
completed to your full satisfaction, we
would ask that you attend our offices
to sign an authority to enable us to
release the final funds to the
Vendor/Developer in order for you to
take possession of your property.
Again, a final receipt will then be
provided from the Developer to
acknowledge the said payment.
I hope that you now have a clear
understanding of stage payments
and how we ensure that your
interests are protected at all times.
FOTOS PITTADJIS
Pittadjis - Miscellaneous
March 3, 2009
4 | Miscellaneous
A registered owner of property who is in receipt of separate Title Deeds, is subject to minor municipal charges such as Immovable Property Tax, refuse collection and sewerage. These taxes/charges are assessed according to the area and size of the property.
I hope this synopsis gives you a clear understanding on the procedure of purchasing property in Cyprus and the costs involved. With a good legal team to help you through the motions of purchasing property in Cyprus, you have nothing to fear!
Fotos Pittadjis
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