Long-term Lease Agreements in Cyprus: Know your Rights
The acquisition of a land ownership right in Cyprus is possible to obtain via a long-term lease agreement for a minimum repayment term of 15 years or longer. Once the application is received by the Land Registry, a specific performance order is placed, and an estate in land is created in the borrower’s favour, which lasts as long as the agreement remains legally enforceable.
This type of long-term lease agreement doesn’t fall under immovable property, however can also apply to:
- A building under construction.
- A building that is due to commence construction shortly.
- A piece of land under division or similar dispute.*
*In this case, the registration of the agreement with the Land Registry is not completed until the issuance of the separate title deed of the property declaring a division, which falls under the agreement.
Upon registration and submission, a certificate is issued and the state in land is effectively created for the benefit of the borrower; legally constituting an asset. This can then be transferred, mortgaged and awarded to the borrower.
When does Rent Control Law take over?
For the period of validity of the relevant registration, the right to specific performance is an applicable form of defense. However, no estate in land is created upon the leased property until the agreement is registered. The issue was examined in a recent case by a Nicosia Court, who held that the terms of the long-term lease agreement in question was governed by applicable Cyprus Rent Control Law and therefore not the Land Registry Office. The applicant (or owner) to the case was the registered shareholder for shares on an immovable property where a shopping mall was being built; he entered into a lease agreement which was declined by the Land Registry.
When the Land Registry examined the application, it decided that the lease agreement could not be registered on the basis that the lender was not the registered owner of the whole share of the immovable property. Another reason for dismissing the application was that the shopping mall was not registered that a division of the property would take place. Therefore, the relevant lease documents were submitted to the Land Registry without the property being divided in any way.
The owner (applicant) consequently terminated the agreement on the basis of unpaid rents owed to him and asked the borrower to deliver the free and vacant possession of the premises.
The court held that under the circumstances of the case, a statutory tenancy was created and the borrower delayed the payment of the rents in arrears. Therefore, it issued an order for the recovery of possession of the premises by the owner and a judgment against the borrower for the total of the rents in arrears until the delivery of the premises to the owner.