A right to or interest in property that will not necessarily hinder the sale of the property, but which does reduce its value, is known legally as an encumbrance. One of the most common forms of financial encumbrance is a mortgage, which (upon creation) will be registered against the title of a property in Cyprus in order to put potential future purchasers of the property on notice about the existence of the mortgage.
In accordance with the relevant law (Transfers and Mortgaging of Immovable Property Law No 9 of 1965 as amended), in order to be valid a mortgage must be registered with the competent District Lands Office. A declaration of mortgage in prescribed format will need to be presented by the parties involved, or their legal representatives, and affirmation that the signatures on the declaration of mortgage and other relevant documents are authentic will be made.
The identity of the persons undertaking the declaration will need to be confirmed and (in the event the registration is undertaken by legal representatives) presentation of an authority to undertake the registration (in the form of a power of attorney, court order or company resolution) will be required.
Guarantors are a common element of mortgaging in Cyprus. The guarantor will execute the relevant form, but will not necessarily be required to be present at the registration of the mortgage at the Lands Office in person.
The relevant registration form will need to be stamped in accordance with relevant rates.
Second mortgages may also be registered in Cyprus, provided that the District Lands Office is satisfied that the second mortgagee is aware of the existence of the first mortgage.
Transfer of mortgage may also be registered in Cyprus. In this case, the relevant Land Registry fees must be settled and application made in the prescribed format. The original certificate evidencing registration of the relevant mortgage will need to be presented amongst other documents.