The conveyance procedure refers to the transfer of a property or its interests from one person to another (or parties) through the use of a written instrument. The conveyance procedure can be intimidating since it is made up of several different and separate segments or instruments that must be examined as a whole and relate to the written document or principle. The conveyance process is designed to help a prospective buyer avoid potential hazards when purchasing a property by safeguarding his or her rights and securing a copy of the property's Certificate of Registration or Title Deed.
Once both the seller and the purchaser agree on a property price, they appoint their respective lawyers to begin the conveyancing procedure and a property reservation fee is paid.
The verification of the property with the Department of Lands & Surveys is one of the most critical procedures in doing real estate due diligence (the process of collecting and verifying information). All pertinent information concerning the property title, including any mortgages, charges, encumbrances (direct claims or liabilities), memos (court judgments), writs (property sale orders) and/or any other court judgements, decrees and/or prohibitions will be found thereon. Another important consideration when buying a home in Cyprus is to ensure that the structure complies with the mandatory building standards and has obtained all the necessary permits. If the property includes a swimming pool the relevant Planning and Building Permits and/or licences should also be available.
A surveyor can also be instructed to inspect and check the condition of the property and provide a report which includes for instance a market valuation, examination of the building structure, any necessary repairs required and inspection of the property boundaries, etc.
The signing of a contract must follow due diligence and the investigation of all of the relevant facts related to the property being purchased. Consequently, the last payment should only be made on the transfer of property ownership. On the signing of the contract, it will need to be stamped by the Tax Authorities at which stage the stamp duty will need to be paid by the purchaser and then registered with the Department of Lands and Surveys thereby confirming that both sides are formally committed to the property transaction. Any delay in the filing of the agreement with the Department of Lands and Surveys could cause problems such as the filing of encumbrances that take priority over the contract of sale.
On the filing of the agreement, the seller is unable to withdraw from the sale and the purchaser’s rights are protected until the completion of the sale.
The right to purchase property in Cyprus is unrestricted for EU citizens and legal organizations. Even if they are married to EU citizens, non-EU citizens must still apply for a permit from the Council of Ministers to purchase immovable property in Cyprus. Non-EU citizens are permitted to purchase two residential properties per person or, if married, two residential properties per couple. The Council of Ministers is appointed by the President and is an autonomous body which has authority over all topics save those expressly delegated to the President of the Republic by constitutional provision. The application is normally merely a formality, and authentic applications and agreements that have already been stamped by the Tax Authorities and lodged with the Land Registry Office are usually approved without complications. The necessary paperwork needs to be taken to the nearest District Administration Office, which is located in either Famagusta, Nicosia, Larnaca, Paphos or Limassol, to make an application for approval to the Council of Ministers.
In addition, to be able to transfer the property Title Deeds into the new purchaser’s name, the property taxes need to be paid (now abolished, but may relate to the years in which they were applicable), as well as municipality taxes, capital gains tax and/or property communal fees (if applicable) need to be paid by the seller. On the payment of all government and local taxes the relevant Tax Clearance Certificates will be issued so that the transaction can progress.
Although the seller is responsible for the payment of property taxes, municipality taxes, capital gains and communal fees, the property transfer fees are the purchaser’s responsibility. Consequently, the Department of Lands & Surveys will calculate, on the day of the transfer of the Title Deeds, the property transfer fees which is also affected by the number of purchasers.
While the above summarizes the conveyance process, it should not be construed as straightforward and problem-free, as each property transaction is unique and dependent on the property's specific circumstances. Each property transaction's timeframe is also determined by the challenges or difficulties that emerge during the process, which includes the level of co-operation between the parties in completing the transaction. Nevertheless, it is an essential process that needs to be undertaken with care and in the best interests of the involved parties.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on a specific matter before acting on any information provided. For further information, please contact Elizabeth Michael, Executive Assistant at the Paphos Office of Michael Kyprianou & Co LLC, Telephone: 26930800 or e-mail: Elizabeth.Michael@kyprianou.com