Contingent Contracts for the Sale of Land in Cyprus
A buyer in Cyprus that purchases an immovable property or land after being told that his contract may not be enforceable in the case of an uncertain future event risks losing his investment should that event not occur. This is unfortunately the case for many buyers in Cyprus who did not secure their loan with a contingent contract.
What is a contingent contract?
Contingent contracts in land law are usually the opposite of absolute contracts, and are normally issued when there is a chance the provisions of the land may change. The have been awarded after the sale of a singular plot of land in Cyprus that may be divided in the future, (given that the relevant permits are issued). Or in the event of the sale of an undivided share in a plot of land on the basis that it will be separated and divided later.
Such agreements are only enforceable when the pre- considered circumstances occur. Therefore, if the event does not happen (in this case, the division or changing the parameters of the land, the agreement becomes null and the seller is entitled to terminate the contract without further consequence).
What is the problem with contingent contracts in Cyprus?
Problems occur however if the seller receives any money on account of the purchase price, he will be under obligation to refund it to the rightful purchaser.
In a recent case where this occurred, Larnaca District Court declared the sale contract of an immovable property was legally terminated and the deposition at the Land Registry was void, consequently resulting in the repayment of all funds paid to secure the property in the form of a deposit; as well as ordering the District Land Officer to delete it from the records of the Land Registry.
The facts of the case are as follows: the vendor was a co-owner of a plot of land, owning 5 out of the 13 shares and agreed to sell them to the purchaser on the condition that the shares were separated and divided according to a topographical plan as long as the other two co-owners consented. The purchase price was agreed at €188,000 and an amount of €18,000 was paid as a deposit upon signing of the sale agreement. The balance of the purchase price was to be paid, with no interest, with the transfer of the sold property to the purchaser, provided a separate title deed was issued.
The sale contract stated that in the event the division of the land and the issuance of a separate title deed refused by the District Land Officer, the agreement was found to be void and the deposit subsequently returned to the purchaser.
Despite all the co-owners agreed to submit the application to the Land Registry for the division of the land in two parts, one for the vendor and the other for the two co-owners, and the procedure for the division of the land started, however later one of the owners refused to sign the required documents and therefore the division became impossible.