Buying a property in Cyprus: What you need to know

The real estate market is growing in Cyprus due to foreign investments and wealthy individuals choosing Cyprus as a suitable destination for buying vacation homes or settling as retirees or entrepreneurs, for that reason ownership transfer of a Cyprus property, should be interested for you.

It is essential to protect the interests of potential buyers and sellers of properties in Cyprus to prevent falling victim to fraud, which has been observed in recent times when dealing with Ownership Transfer of Cyprus Property. It’s also important to note that transferring property is not a simple process and should always be done with the assistance and supervision of a competent professional.

Property ownership transfer process

The process of transferring a property depends initially on whether the property is in a complete stage, meaning that ownership titles have been issued and it is ready to be transferred at any time. If this is the case, then the transfer can be made directly by appointment at the Land Registry Department.

In the opposite case, where something is pending regarding ownership, or a loan is involved in the case, it would be wiser for the entire process to start with the deposit of the sales contract at the Land Registry Department, so that the rights of the parties are secured until the transfer process is completed.

In order to transfer immovable property, form N270 of the land registry must be properly completed and it must be accompanied by:

1. Certificate of Property Registration (Ownership Title)
2. Exemption from Real Estate Tax (for this purpose Form N313 must be completed)
3. Exemption from Municipal or Community Authority.
4. Certificate of Payment from the Sewerage Council
5. Certificate of Payment from the Water Supply (Law No. 2 of 2019 on Transfers and Mortgages of Real Estate – Amendment)
6. Payment of capital gains tax (only if the transfer is made by sale. Form TF401)

Property transfer through representatives: What you need to know:

If a property transfer is made through representatives, all relevant documents must be included, signed, stamped, and certified by authorized officials, as required by article 10 of law 9/65. Additionally, the property being transferred may be subject to a mortgage or other encumbrances, which could pose a challenge.

However, there’s an exception for mortgages, as article 31 of Law 9/65 allows for transfer by providing a certificate of encumbrance and obtaining the signature of the recipient acknowledging the existing mortgage. This certificate serves as proof of the bank’s consent for the transfer, with the property remaining under the mortgage’s weight.

Property Due Diligence by our Lawyers

If you’re a buyer, it’s crucial to know the proper process to ensure the transfer of property and the rights and limitations associated with it, regardless of the method you choose for transferring the property.

1. Verifying the property registration certificate (title deed) is essential when buying a property. The title deed confirms the property’s registration in the Land Registry Department, as well as the name of the intended seller. It’s important to ensure that the title deed is recent to obtain up-to-date information about the property.
   
2. Before a property sale, it is important for the seller to consult with the Tax Department and determine whether or not the transaction is subject to Value Added Tax (VAT). If VAT is indeed required, the buyer may be eligible for a reduced VAT rate of 5%, instead of the standard 19%, if the property will be used as a first residence. It is essential to understand and comply with VAT regulations to avoid any unexpected financial consequences in a property sale. Consulting with a tax professional or legal expert can provide helpful guidance in navigating the VAT requirements.
   
3. It is important to know the urban planning characteristics and development rights of a property if it is land, has a building, or is a unit resulting from a separation. Some properties can only be developed for specific use. Additionally, it is important to know if there is an Approval Certificate with or without Notes, which is issued when a development is completed according to the terms of the building permit and/or construction permit. You should also be aware of any obligations or conditions imposed by the municipality on the property, which zone it falls under, whether the necessary permits have been issued by the urban planning authorities, and the existence of common areas of the building (e.g. parking spaces).
   
4. Calculations of transfer taxes, in case the property is not subject to VAT, then the law stipulates that transfer taxes must be paid to the Land Registry Department upon transfer of the property. It is important to calculate these taxes and include them in your budget.
   
5. Before purchasing a property, it is crucial to request a Legal Verification Certificate issued by the competent Land Registry Office to determine whether the property is burdened with mortgages or other encumbrances. This certificate displays the legal characteristics of the property, such as ownership status, any encumbrances, court orders for the sale of the property, personal or property-related prohibitions against the owner, and more. As the certificate reflects the legal status of the property at the time of its issuance, it is important to request the most recent Legal Verification Certificate possible. Obtaining this certificate provides a legal safeguard and ensures that the property is free of any legal issues that may affect the buyer in the future.
   
6. Your legal advisor will contact the mortgage lenders (banks or loan management companies) as well as the creditors who have registered a judicial lien against whom a memorandum has been recorded, to request a written obligation release for the encumbrances, after a certain amount, which should be less than the agreed purchase price, has been paid.

AVZ Law Office Cyprus

Contact us for a legal advice on buying or selling real estate, we offer our legal services to individuals and real estate professionals to ensure smooth operations and protect property rights.