A practical guide prepared by Y. Vasiliou & Co LLC for the process of buying a property in Cyprus.
Buying a property in Cyprus is a process that is easy and fast. Below we mention all important points that you should be aware when buying a property in Cyprus.
The legal framework
Cyprus legal system is based on Common law, and it’s been harmonized with European Union laws and regulations.
Land registry and registration of properties
Cyprus offers to land/homeowners the right to have a title deed of their holdings and any transaction related to real estate in order to be a valid transaction shall be registered in the Land registry.
Acquisition of Property
Cypriots and EU citizens have the same rights in purchasing free-hold properties and have no restrictions when purchasing a property in Cyprus. However, non-EU citizens are able to have free-hold properties although with some restrictions. The main restriction is the number of properties they can acquire and that is governed by the Immovable Property Acquisition (Aliens) Law and the Directives of the Central Bank of Cyprus. The main criteria for a foreigner (non-Eu) to be aware of are the following:
- Is able to acquire an apartment or a house.
- Is able a villa on a building site or a plot of land not exceeding 4. 014sq.metres.
- A piece of land not exceeding 4.014m2 provided that a residence will be erected for owner occupation soon, but not a share of a land, it shall be the whole part.
- A second home may be allowed depending on the type and use of it (i.e. a holiday home in addition to a permanent home in the capital city).
In general, it is very rare for a rejection of an application of a second holiday home by a foreigner.
Reservation Agreement:
Reservation agreement is typically the first step for the conclusion of a transaction between a seller and a buyer in an effort to start the due diligence of the property in question and ensure its transferability.
Land registry search:
When you agree to buy a property you should always request a land registry search which shall be read carefully, ensuring that it refers to the property you are interested as well understanding the findings of the land registry concerning the property.
Search Certificate:
This Search Certificate ensures that the Property is not encumbered with any mortgages, or any other legal burdens and that the Property will be transferred into the Purchaser’s name free from any encumbrances and/or legal and/or physical burdens / free of any legal or real encumbrance, charge, mortgage and/or other obligation whatsoever, including all interests of the Seller’s in the Property.
It is always advisable to read with a lawyer the said search.
In Cyprus there are two types of property depending on the case, is either a property with a title deed or a property without a title deed.
Property with Title deed:
When buying a property with a title deed you can conclude the transaction either with the preparation of a contract of sale or directly at the land registry directly. It is recommended to have a Contract of sale in all the transactions as it ensures the understanding of the parties as to what they sell/buy and the state of it including other terms, such as delivery time, payments of amounts due, defects and many other. On a further note a contract of sale it ensures the intentions of the parties and the period they have to wait until conclusion, as in some cases, i.e. when a foreigner is buying the property a permit to buy is required as explained above.
Property without a Title deed:
When selling or buying a property without a title deed either a property that is for the first time sold or a resale of a property, you have to make all the necessary checks to ensure that the property complied with all the requirements of the planning permit and the building permit and that is subject to issuance of a title deed. It’s common in Cyprus to have a waiting time of 2-3 years from the time of the completion and delivery a project until you will obtain the title deed, in case you will sell/buy the property which falls in this category you can always make an Assignment agreement which will assign all the rights and obligations of the contract of sale to the new buyer.
Payment of common expense and utilities/community and immovable taxes
All expenses and taxes shall be settled up to the date of the transfer of the property onto the name of the new buyer.
Transfer of Funds:
One important element in completing a real estate transaction is to inform the banking institutions in which you/seller is going to receive the funds of the sale of the property and also verify that for those funds the source of wealth and origin is proven and provide that to the bank.
The above information are for general information purposes only and does not constitute legal advice.
When buying a property is always preferred to consult with your lawyer first.
