Process of purchasing real estate in Cyprus

EXECUTION OF A REAL ESTATE SALE AND PURCHASE TRANSACTION:
1. Contribution of a deposit for the selected property.

In practice, the deposit is between €1,000 and €10,000 and is paid to the agent/realtor. Upon payment, the buyer receives confirmation of payment and the property is taken off the market and reserved by the buyer.

2. Choosing an attorney

The purchase of real estate is a legal process and without the help of a lawyer here can not do without, as it is very important to carry out the required checks and prepare the necessary package of documents to formalize the transaction. The lawyer is also responsible for checking the cleanliness of the transaction, drawing up the contract, registration of the real estate in the Land Cadastral Department and reissuance of the title deed.

The buyer enters into a legal services agreement with a lawyer for legal support of the transaction and provides the lawyer with the necessary power of attorney certified by a local notary (a copy of the passport and personal signature of the buyer is required for the preparation of the power of attorney and the contract). This power of attorney will allow your lawyer to complete the transaction without your personal presence.

3. Signing the contract

The contract of sale shall be drawn up either in Greek or in English. A translation of the contract can be provided by the Lawyer at the request of the buyer (Important: the translation of the contract is not legally binding and is provided for the buyer’s information only). In the prepared contract it must be obligatory to specify:

• Amount and method of payment (If paid to the buyer’s account, it is necessary to specify bank details)
• Timing of payment and completion of the transaction

In practice, the sale and purchase agreement is prepared in 3 copies: one copy is left with the seller, one with the buyer’s lawyer and one copy is registered with the Land Cadastral Department.

Also in practice, 20 to 30% of the value is paid at signing and the balance is paid at the closing of the transaction.

4. Payment of stamp duty and registration of the contract

Immediately after signing, the lawyer must pay stamp duty, which depends on the value of the property and ranges from 0.15% of the first 170,860 Euros and 0.2%. of the remaining amount exceeding 170,860 Euros.
One copy of the contract is also registered at the Land Cadastral Department and the Buyer is given the registration number of the contract (ΠΩΕ).

5. Reissuance of Owner’s Title

After signing and registering the contract with the Land Cadastral Department, the seller’s lawyer is obliged to prepare a certificate of absence of debts including the absence of debts to the tax authorities related to the real estate. Without the preparation of these certificates, the seller will not be able to transfer the Title of Owner to the buyer.

At the same time, the buyer’s lawyer prepares the application and the necessary documents to obtain a permit from the Council of Ministers of Cyprus for the purchase of real estate. This procedure is a formality and the certificate is issued within 2-3 weeks.

After the preparation of certificates and documents by both parties, a date is set for the re-issuance of the Title of Owner and completion of the transaction. The final payment according to the contract must be made on or before the date of Title Deed renewal, as the ownership rights are irrevocably transferred to the buyer.

Immediately thereafter the buyer takes possession of the property and receives the keys to the property (if the buyer wishes to take possession of the property earlier, it is possible to agree this with the seller’s solicitor on payment of the full amount).

The buyer must pay the Title Transfer Tax, which is calculated on the appraised value of the property according to the following scheme:

• up to €85 000 – 3% of the object value
• from €85,000 to €170,000 – 5%
• over €170,000 – 8%

When property is registered to two or more persons, the amount of tax is reduced because the taxable value for each owner is proportionately reduced.

The given scheme of actions may vary depending on specific conditions. Such situations include cases in which:

• The buyer resorts to mortgage lending

• Property is purchased under construction

• When purchasing a property that does not have a completed Title of Owner.

• When purchasing a secondary property in case the seller has not purchased the Title of Owner for himself (an assignment agreement is executed).

Important aspects of buying real estate:

1. The Parliament of the Republic of Cyprus has approved a regulation to abolish or reduce the re-registration fee which provides the following benefits:

• For buyers whose property is not subject to VAT, the Title Deed fee is reduced by 50%.

• Buyers whose properties are subject to VAT will be fully exempted from paying the Title Deed renewal fee.

2. Utility Expenses:

Utility costs cover the owner’s share of the cost of cleaning and maintaining the public areas of the apartment complex, gardening, maintenance of community pools, and fees for managing the apartment complex. The buyer is obliged to pay the utility costs if they purchase a property that is part of the complex.

3. Residence permit:

The purchase of real estate on the island entitles the owner to obtain a residence permit. For advice on Immigration issues please contact our specialists. The transaction process related to the purchase of real estate in Cyprus takes from 3 to 6 weeks in case there are no any delays on the part of the seller and the buyer. Local legislation is largely based on the British equivalent and protects buyers of real estate in various aspects.

This article includes general information provided for information purposes and does not constitute legal advice. For further information please contact us and we will be happy to advise you.