You’ve purchased a property in Cyprus from a developer, your sales contract is deposited with the Cyprus Land Registry and you’re waiting for the title deeds to be issued by the Cyprus Land Registry and transferred to you by the developer – but it’s taking time, years actually. It could take up to ten years for the Cyprus Land Registry to issue the title deeds of a new property so what happens if you’d like to sell your property before they’re issued?
This is a dilemma that sellers have faced for some time. Before 2011, selling your property required the co-operation of the developer you bought the property from. As the land registry only held a sales contract between you and the developer (pending issuance of the title deeds), in order to register the new buyer, a new sales contract would require the co-operation of the developer. This caused delays and developers often charged “contract cancellation fees” , an additional expense. At worst, if consent was not forthcoming it provided a real stumbling block to selling property where title deeds had not been issued.
Whilst issuance of title deeds hasn’t speeded up over the years, the Cyprus parliament did enact a new law in 2011, which promised to make the process easier for sellers and buyers. The Sale of Immovable Property (Specific Performance) Law N81 (I) 2011 or “the Specific Performance Law”) allows the property owner who does not hold title deeds to pass on all his rights and obligations under his sales contract with the developer to the new buyer, without seeking the permission of the developer. In order to register the new sale, an assignment agreement, between only the seller and the new buyer must be signed and then filed at the Land Registry. Once it’s filed, all the rights and obligations of the seller are transferred to the new buyer and the developer is bound. The new buyer becomes the new beneficial owner and he obtains the same legal protection that the original purchaser had. As the vendor/developer is not a signatory to the assignment agreement he is not able to charge the original purchaser cancellation fees or any other administration fee that may previously have been referred to.
The Specific Performance Law is also good news for the new buyer as he is protected when the title deeds to the property are issued. If, once the title deeds are ready and the developer is refusing to transfer title to the property in the name of the new buyer without relevant cause, then the new buyer can apply to the Cyprus courts and obtain an order for the title deeds to be issued in the name of the new buyer. The law ensures that title will be transferred in the name of the new buyer despite the fact that the developer and the new buyer do not have a contract between themselves. As a further protection to buyers and sellers, the Specific Performance Law allows for courts to impose criminal sanctions upon a developer or vendor in certain circumstances.
However, in practice I must say that as a Cypriot lawyer acting for both original and new buyers, it is extremely helpful to have the co-operation of the vendor or developer when concluding assignment contracts. I will specify some of the reasons below:
By using the stick instead of the carrot, the Specific Performance Law’s threat of criminal sanctions against un-co-operative developers has assisted property sellers and new buyers. It now allows buyers and sellers to proceed without obtaining the consent of the developer, ensures that a developer does not without reason withhold title deeds and it imposes criminal sanctions on uncooperative developers in certain circumstances. In practice the developer/vendor should not be ignored and in fact may at times, even assist in getting the job done quickly. If you are a property owner and do not have good relations with your developer, your lawyer should be able to assist in ensuring that the sale to the new buyer still proceeds smoothly. Furthermore, your lawyer should follow the law closely to protect you but they must also be commercially minded in order to obtain the best possible result for you.
The information and opinions within this article are for information purposes only. They are not intended to constitute legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to your particular circumstances.