The Law of Specific Performance & Belated Disposition: Are Cyprus Buyers Fully Protected?
The law of specific performance in Cyprus protects property buyers from any wrongdoings on behalf of the seller. The legislation gives buyers a six month time frame from the date of signing the sale of contract for full revocation (or disposition) with the Cyprus Land Registry. After this 6 month period has expired, the law holds that an extension is not permitted.
A Larnaca court recently upheld this ruling. The case in question involved an application from a buyer of a property in Cyprus, with the signed sale contract dating back to 2010. The buyer requested a court order allowing the belated deposition of his sale contract with the Land Registry for specific performance purposes, to which the seller objected. The Larnaca court provided significant ruling on the interpretation of the specific performance legislation in question.
The aforementioned sale contract between the two parties was actually signed over six years ago, prior to the implementation of the specific performance legislation in Cyprus. The deadline for the deposition of the sale contract was subsequently extended until January 2012 however the buyer did not make the necessary arrangements before the extension, the court held. After a further amendment of legislation in 2012, an additional six-month gestation period was given to effectively dispose of the sale of contract; however the buyer again missed this opportunity. Now in 2017, he is stepping forward to apply for a belated disposition.
The buyer’s court case was based on a clause that permits court discretion to allow for the late deposition of the sale contract as per the buyers request. However the clause actually omitted reference to the 6-month window of gestation, therefore, the discretion of the court to allow for the tardy deposition was restricted.
Taking into account the date of the sale contract (signed prior to the enactment of the specific performance law) it was held that the application of the buyer did not fall within the scope of the legislation.
The specific performance law is supposed to act as a guarantee for buyers in Cyprus; however the legislation is not without its flaws, for example:
- There is no requirement for the seller to clear any mortgage on the property before the contract of sale is deposited at the Land Registry.
- Sellers are free to defer or rearrange an existing mortgage without the buyer’s consent.
Under the given circumstances, there looks to be a requirement to amend the existing legislation for the House of Representatives to proceed with the relevant clauses in the specific performance law for such ambiguity to be clarified, the discretion of the court to be widened and the right of each buyer to secure a court order allowing the deposition of his sale contract with the applicable safeguards.
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