Have you conducted all the relevant research for purchasing your new property in Cyprus? Now it’s the vital final stages; signing the contracts and finalising all agreements. A common scenario for many property owners on the island is that even after transferring funds to secure the property, the title deeds have not been available, essentially meaning that the rightful ownership can be disputed legally. Read on to avoid this common pitfall and other contractual mishaps that occur without proper knowledge.
Still haven’t prepared any preliminary research for your future property? Click here to read our common preliminary mistakes first.
Most of the potential problems encountered when signing property contracts in Cyprus can easily be sidestepped if the below pitfalls are considered:
1. Signing the sales agreement without performing due diligence checks
While service providers are not legally required to conduct due diligence such as a mortgage check automatically, a competent service provider will deliver this as a basic requirement. In 2012, the Cyprus government introduced a law of specific performance holding that a contract of sale takes precedence over any pre-existing mortgage in Cyprus; however we would recommend examining whether any mortgages have been placed on the property before signing anything to avoid any ownership disputes later on.
A contract of sale cannot be properly drawn up without considering the results of these searches. Additionally, buyers are advised not to trust developers to undertake their own due diligence checks even if they provide official extracts from the Land Registry or other government departments.
2. Believing a verbal agreement or understanding will suffice
Buyers of Cyprus property are recommended to ensure that all negotiated points are set out in a written or hard copy of the contract of sale including the following:
- Any previously agreed added amenities.
- Unusual terms.
- An inventory of repairs or damages.
3. Not depositing the contract of sale with the Land Registry
A contract of sale must be given to the Cyprus Land Registry within the time frame specified by the applicable legislation. Buyers have lost important legal rights by not completing this simple step within a timely manner. Additionally, a contract of sale must be stamped within the time frame specified by law; otherwise the buyer will have to pay late penalty fines.
4. Believing that creating a will won’t be necessary for another decade or so
The Cyprus Law governs all immovable property situated in Cyprus, which includes a component of forced heir ship. However, certain categories of foreign buyers are entitled to circumvent these regulations and make a will to donate the property as they see fit. Cyprus property buyers are recommended to draft a will as soon as property is purchased in Cyprus.
Most importantly, it is essential to obtain independent advice from an experienced service provider that will ensure all buyers prepare to ensure they are protected from any mistakes mentioned on this list.
It is important to learn from the lessons of buyers who purchased property before the financial crisis and who remain entangled in expensive legal battles due to making contractual oversights as mentioned above. Despite this, the Cyprus property market is currently thriving with of Chinese, Russian, Chinese and UK and HNWIs are investing on the island, even more so than before the financial crisis according to the latest housing research.
Above all, it is essential to obtain independent advice from an experienced service provider that will ensure all purchasers prepare to ensure they are protected from all mistakes mentioned on this list. Eltoma Property can assist with any of the above issues contact us, our property experts would be happy to help you make the right choice for your property purchase.
Click here to read part 1: Common preparatory mistakes to avoid when purchasing a Cyprus property.