The lawyer's guide to buying a property in Cyprus

Mark Tilden provides a comprehensive guide to things you should and shouldn't do before purchasing property in Cyprus.

As in England before building can take place Planning Permission and Building regulation permission from the relevant authorities needs to be obtained. If not, then the construction of your property will be illegal and could be demolished. Although you might have a claim for negligence against your builder, do you really want to have all that trouble - and expense.

However, in Cyprus it is often the case, because of the vast amount of building that is taking place here at the moment, that Planning Permission and Building Permits are only granted after building work has commenced (or even after the building is finished!) due to the overwhelming amount of work the local planning officers have. It is therefore essential that in your contract you have a clause that indicates that the granting of all necessary planning permissions and Building regulation approvals is a Condition Precedent to your contract and that if permission should be refused or if any restrictions should be placed on the planning permission granted that will materially alter the size or style of property that you have been promised by the builder.

Ownership of the land

Perhaps even more fundamental than ensuring that the builder / developer has or will obtain planning permission for the construction of your property, is ensuring that he actually owns the land that your property is to be constructed upon. This should be an easy fact to establish as, unlike in England and Wales, all land in Cyprus is registered at the Land Registries. You must ensure that he owns what he is selling you.

Mortgage on the land?

Has the seller of the land got a mortgage on the land? It is therefore essential that you find out whether he has and if so obtain specific confirmation by way of a clause in the contract that the mortgage will be discharged by the seller on completion or a Bank waiver will be issued by the mortgagee, otherwise you could be responsible for his mortgage.

Build percentage

All land in Cyprus carries a build percentage and this percentage is lower the further out into the countryside you go. In the middle of a city, the percentage could be as high as 90%; in the countryside as low as 10% - 20%. That means that if you have a plot of land that is in size 1000m2 and the build percentage is 20%, the maximum size your property would be 200m2.

Other developments

Any reputable developer or builder will be more than happy to show you other properties that he has constructed. If he offers you this, then most certainly take him up on his offer, and if possible ensure that the owners of the properties are present when you call so that you can talk to them and find out what his after sales service is like, how quickly he comes to fix snagging matters etc. If he does not offer to show you other properties, then ask to see them. If he refuses or seems reluctant, then think very carefully about proceeding. Why would he not want to show you his other developments?

Project management

New properties in England and Wales are guaranteed either under the N.H.B.C. Zurich Insurance or an Architects Certificate. In Cyprus there are no such schemes. If you have agreed to purchase a property in Cyprus and you live thousands of miles away, what assurances can you have that the property is being built correctly? Unless you are there to observe the construction on a daily basis, you may want to consider the appointment of a Project Manager to supervise the construction of your property. This will not be inexpensive, but if you weigh up the cost of (a) having to live with a property that does not meet your requirements (b) the cost of flights, accommodation etc if you were to fly over to Cyprus every few weeks (and are you qualified to know what to look for anyway..?) it is a price worth paying.

Surveys

If you are purchasing a second hand property you may want to get it surveyed, for the reasons as explained above; i.e. no one is likely to have supervised the original construction of the property in the first place! How do you know that it has been built correctly or indeed safely?

Investigation of title

As well as ensuring that the seller actually owns the land he is selling to you (and all of the land) you should find out whether: The land is subject to any incumbrances, e.g. does anyone have any rights of way over the land that you are purchasing. Any consents from any third parties are required - for example, is access obtained directly from your property to a main road or does it have to pass over any other land to get to that road?

General matters for consideration

Most contracts in Cyprus have provision for stage payments by the buyer to the seller. When you agree to purchase a property a reservation deposit of about 2% of the contract price is paid. This is normally non-refundable if you change your mind. When you then sign the contract, a deposit of 10% - 30% of the contract price is paid. The number of stage payments are a matter of negotiation between you and the builder. Make sure that you are happy with how these payments have been structured in the contract and that you will have sufficient funds to meet them as and when they fall due. Get written and signed receipts for all payments made.

All prices are quoted in Euros and not Pound Sterling. Make sure that you take this into account as exchange rates can fluctuate over the length of a build contract.

Unless you are purchasing a second hand property, it is likely that the construction of your property will take up to 18 months. Make sure in the contract that there is a penalty clause on the builder if he does not deliver the property within, say, 18 months from when you sign the contract. If this is not in the contract, you will have no control over the builder and if he takes 5 years to build the property, there will be very little that you can do about it! Such penalty clause take the form normally of a financial penalty for each week / month the builder takes in excess of the agreed completion date.

The contract includes a retention by you (normally about 5-10 percent) of the purchase price for 12 months, if you can agree it, but certainly not less than 6 months, against any problems with the property that become apparent after completion. Make sure that the builder contracts with you to provide the usual services - mains electricity, telephone, mains water and if applicable mains sewerage, although many properties have their own private sewerage system.

The contract should have a specification list attached to it as to what the builder is providing for the price. It should indicate how much he has allowed for tiles, for bathrooms, for sanitary ware etc. If you wish to upgrade to say gold taps in the bathroom, then you will have to negotiate this with the builder and pay him the difference between what he would allow you and the cost of the extras.

Also attached to the contract should be:

  • an architects scaled plan to the property showing not only the size and location of each rooms, but the location of electrical sockets, telephone points, computer and T.V. points;
  • the route of the services and conduits in the property;
  • copy of the builders title deeds and planning permission / building permits (this will be in Greek Cypriot and you are entitled to ask for a translation if you wish).

All plans should be drawn showing the compass point north. More than likely you are coming to Cyprus for at least some sunshine. You want to ensure that the garden and pool area will be where you want it to be in relation to the sun (normally south facing). All plans must be signed by you and the builder.

Normally, you will be allowed to choose the type and style of tiles, bathroom, fixtures and fittings etc. yourself, although the builder may have a selection to show you himself (he will have negotiated discount from his suppliers!) Be prepared to come to Cyprus at least once before the house is finished and spend a week choosing such items - even down to the colour of the grouting in the downstairs cloakroom! If the builder has agreed to include fixtures and fittings in the contract (for example as an incentive make sure that these are written into the contract as extras part of the purchase price. If he has agreed external extras, like a carport, also make sure that he has planning permission for this.

If you are purchasing a property on a complex, make sure that a Management Company will be set up. If not, do not buy.

Make enquires at the local council office as to what other development plans there are for the area where your property is situated. You would not be very happy if the property was sold to you on the basis that it has unobstructed sea views only for you to return 12 months later to find that those sea views have been replaced by a Club 18-30 Holiday Complex.

Insert a clause into the contract which states that within so many days post-completion the builder will remove all his rubbish from the site, that he will leave the property in a clean and tidy condition and if appropriate have carried out all landscaping of gardens and surrounding areas.

Whether you are buying a new property, a second hand property or a property on a complex, visit the site at night as well as during the day. In Cyprus, most people only come to life after the sun goes down and you do not want to find that the total teenage population of Cyprus hangs around at night outside your property.

Also, leave your car at the property and walk. How long does it take you to get to the local shops, supermarket, bakery etc? Not much fun if it takes to 30 minutes to get to a local shop in the midday heat of August.

Is there a local bus available? How frequently does it run? Could a taxi driver find you if you gave him your address?

If you do not have someone here representing your interests it is best for you to be present on the day of completion in Cyprus when you hand over the balance of monies. This is because if there are snagging items present, it is best to agree them before you pay the balance. If there are such items, write them down and get them signed by both you and the builder and agree a timescale for rectification.

Once you have collected the keys from the builder / site office, change the locks. You do not know who, during the course of construction, the builder has given keys to.

However unlikely it may be, you may decide that between the signing of the contract and completion you do not want to own a property in Cyprus, or your personal circumstances may change. Make sure in the contract that there are no clauses which forbid the assignment of the contract to a third party.

You will also eventually get a completion certificate from the local authority confirming that the property has been built in accordance with the plans submitted to them by the builder.

The Builder will have in place insurance to cover problems with the property during construction. Be aware that from the moment keys are handed over to you, you need to have adequate Buildings and Contents insurance in place.

If the builder is not a company but an individual you will need to consider what would happen to the construction of the property if something were to happen to the builder - if he was to die before the property was finished. Who would be available to complete the property? This is clearly a delicate matter to raise and hopefully will not happen to you, but if it did...?

Finally, enjoy your new home!

About the author

George Coucounis

Mark Tilden holds a BA (Hons) Degree from the University of Winchester and a P.G.C.E. from the University of Cambridge. He passed his Law Society finals in 1991 and after two years articles in Bath he returned to Plymouth where his father had had his own law practice since 1958. In 2006 Mark disposed of the practice and now practices from Cyprus.

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