The procedure of a purchase of an Immovable Property must be handled and monitored by an Expertised Lawyer, on behalf of the Seller or the Buyer, in each case.
On 2nd April 2021, the House of Representatives voted in favour of the Bill for the amendment of the Advocates Law, Cap 2. The amendment states that the preparation of agreements as well as the legal advice relating to the sale of real estate, will be done exclusively by by those who practice law.
Even in the scenario of disposal or the acquisition of real estate property, there are several obligations and rights that we are delighted to advise and provide our legal services.
Once you decide to purchase the Immovable Property, a due diligence procedure must be followed in order to avoid any surprises and unexpected situations. During the due diligence procedure, we need to examine whether the property has separate title deed and whether the Immovable Property is burden with any mortgage and/or any encumbrance including MEMO, previous sale agreements, etc. If we refer to mortgage form Bank, relevant waiver is required for the withdrawal. Kindly note that the mortgage and/or encumbrance must be released from the Immovable Property simultaneously with the transfer and register of the Property in the name of the Buyer. A recent title deed and a certificate of search from Land Registry must be disclosed.
In the event that the Immovable Property is under construction we will also need to examine whether the planning and building permits have been issued. Also, the Vendor is obliged to provide the prospective Buyer with Architectural Plans and Technical Specifications.
Drafting of Sale Agreement and Stamp duties
Once the due diligence procedure will be completed and the Purchaser decide to proceed with the purchase of the Immovable Property, either a Contract of Sale or an Assignment Agreement, in specific cases, shall be negotiated and drafted.
Upon the signing of the Contract of Sale, the Purchaser is obliged to proceed with the stamping of the agreement within thirty (30) days from the date of the signing, otherwise there will be penalty over the respective amount. The stamps duties are calculated based on the sale price as follows:
• 0% up to €500,00;
• 1.5% up to €170.000,00; and
• 2% for €170.000,00 and above.
If we are acting on behalf of the Buyer, we are entitled to deposit the Contract of Sale to the District Land Office, for specific performance, in accordance with the provisions of the Immovable Property (Tenure, Registration and Validation) Law, Cap. 224 and its subsequent amendments.
The purpose of this submission is to secure the Purchaser’s rights while actually such deposit acts as a burden over the Property. For that purpose, along with the contract of sale duly stamped, we need to submit also copies of IDs if the Parties are Cypriots, Passport copies if they are foreign or Corporate documents if we refer to juridical person.
Transfer of the Property and delivery of Possession
Subject to terms and conditions of each sale agreement or assignment agreement, the last installment is paid simultaneously with the transfer of the Property and registration in the name of the Buyer, taking also free possession of the Property. It is very important to note that the Vendor is obliged to acquire Tax Clearance Certificate through N.313 form from the Tax Department including payment for Capital Gains Tax in order the Land Registry allows the finalization of the Transfer, along with the payments of all relevant expenses of municipality/community council and sewerage board.
Buyer’s responsibility at that stage, is to proceed with the payment of transfer fees. The transfer fees are calculated through the below formula based on the sale price. However, the Land Registry shall proceed with the valuation of the Property at the date of the transfer. The latest step of the above-mentioned procedure is to proceed with the transfer of the title deed. The transfer fees are being calculated by the District Land Registry Office as follows:
• 3% on the €0 — €85.000,00 of the value of the Immovable Property;
• 5% on the €85.000,00 — €170.000,00 of the value of the Immovable Property; and
• 8% from €170.000,00 and above of the value of the Immovable Property.
The above transfer fees are reduced by 50%. In the event that the Purchaser will buy an Immovable Property which is subject to V.A.T and pay at the time of the payment of the purchase price the applicable V.A.T (the Purchaser has the right to apply for a reduced V.A.T rate of 5% instead of the current one 19% for one (1) Immovable Property), then he/she will not need to pay any transfer fees at the Land Registry Office.
It is remarkable that, if the Purchaser is a third country national but not member of EU, before proceeding with the transfer of the Immovable Property upon his/her name, he/she will need to obtain a Council of Ministers approval. We usually arrange for submission of that application once we have the singed contract of sale along with all supporting documents.
Governing Law and Jurisdiction
The Sale Agreement shall be governed by and construed in all respects in accordance with the laws of the Republic of Cyprus and the Parties shall agree that any dispute arising out of or in connection with that Agreement shall be referred to the exclusive jurisdiction of the Cyprus Courts.
At Mylonas Law our experience is vast having handled plenty of Immovable Property transactions on behalf of Buyers, Sellers and property developers.
For further information on this topic please contact AMG Mylonas & Associates, LLC by telephone +357 25 101080 or by e-mail [email protected]
The information provided by Mylonas Law is for general informational purposes only. It does not constitute or should not be read as a legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice. No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication.