To obtain a Title Deed, a real estate buyer must meet a number of requirements. Firstly, the purchase and sale agreement must be registered with the Land Registry Department, and stamp duty must also be paid for its registration. Secondly, if the buyer is a foreign citizen, he must send an application to the Cypriot authorities for permission to purchase real estate.
Step by step
Registration of the purchase and sale agreement in the Land Registry Department is a guarantee that the transaction data and the name of the new owner are entered into the state register. To register, the contract must be signed by the parties and have the seal of the developer company, if it is one of the parties to the transaction. It is necessary to register the contract with the Land Registry Department no later than 2 months after its conclusion. When registering a contract with the Land Registry Department, an oval seal is placed on it with the number of its entry in the register.
Within 30 days from the date of signing the contract of sale, you must pay the stamp duty. Its size is 0.15% for real estate values up to 170,860.14 euros and 0.20% for more expensive properties. Stamp duty is paid directly to the Land Registry Department.
After the transaction is registered with the Land Registry Department, settlements are made with the seller, who must hand over the keys to the buyer. From this moment on, the buyer can use his purchase, but before receiving Title Deeds, his rights cannot be called complete.
30 years and 3 years...
So, after the registration of the contract of sale, the buyer becomes the owner of the real estate. He gets the right to use, but his rights regarding the disposal of real estate before receiving the Title Deed may be limited by the seller, and such cases are very common.
In particular, if the owner wishes to sell or donate real estate that he owns only on the basis of an agreement with the developer, he will need the seller's permission to carry out the transaction. Often, the developer agrees to such a deal only on condition of paying a substantial fine, insists on his own mediation, or does not agree to such a deal at all.
To avoid problems with resale without obtaining a Title Deed, you can choose a developer who does not restrict the rights of the buyer, and this should be fixed in the contract of sale. Unfortunately, not all developers meet their customers halfway.
In any case, the Title Deed must be issued within 33 years from the date of purchase. After this period, according to Cypriot law, the property is returned to the ownership of the last owner or developer registered through the Title Deed.
Let me buy
As a second condition for obtaining a Title Deed, foreign citizens must apply to local governments for a permit. Such a permit is now issued within a period of 8 to 12 months.
At the moment, this permission is formal, and it is guaranteed to the applicant if he has no problems with the law in his home country and in Cyprus and has a confirmed stable income.
In order to obtain a permit to purchase real estate, the applicant must provide the Cypriot authorities with information about his financial situation, architectural plans of the object being purchased, the name of the developer company or the name of the current owner.
Any purchase and sale agreement is valid even if the authorities reject the application of a foreign citizen for a purchase permit, but it is recommended to include provisions in the contract in case of refusal, ensuring reimbursement of funds paid or other types of compensation.
Will he pass or not pass?
Upon registration of the purchase and sale agreement with the Land Registry Department and receipt of a written notification from the Cypriot authorities that a permit for the purchase of real estate has been issued, you can submit documents for the issuance of Title Deeds.
It should be noted that when buying on the primary market, the buyer can submit Title Deed documents only after the developer puts the complex into operation. And this, in turn, becomes possible only when the developer removes credit encumbrances from the land on which the complex is being built – as a rule, it is secured by the bank.
This process takes a lot of time. In the most optimistic case, the developer can put the complex into operation in about 1.5 years after completion of all work, and in the pessimistic case – in 4 years. If more than four years have passed since the completion of construction, and the developer has not been able to put the complex into operation, then violations of the law were committed during construction.
If the complex is put into operation, it will take up to 2 months for the buyer to complete the Title Deed from the date of filing the application, and upon receipt it will be necessary to pay a progressive tax on registration of property rights.
If the purchased property is registered in the names of two persons – for example, a husband and wife, then the market value of the property for calculating the property registration tax by each of the owners is divided into two, which significantly reduces the total amount of the fee.
Three types of titles
According to statistics, the number of residential real estate units whose developers are unable to put the project into operation due to various violations was about 130,000 as of September 2009. Accordingly, buyers of real estate in these projects cannot receive Title Deeds, and this is a big problem for the whole country as a destination for investment.
Last year, the state began to work seriously on the issue of Title Deeds. Thus, the Ministry of Internal Affairs of Cyprus, together with the Department of Land Registration, is preparing a legislative act envisaging the creation of a new three-tier system for issuing Title Deeds. The first, "full" type of Title Deeds will be identical to the documents that are being issued now. The second, "incomplete", involves the inclusion of a paragraph in the text of the document, which records any minor changes in the boundaries and dimensions of the real estate object that were not agreed in the original draft. The third, "limited" type will be issued in case of more serious violations, but the owner will not be able to sell or mortgage such a property.
It is assumed that such a system will be very effective, as it will allow you to change the type of title depending on the situation. If this law is approved, it will come into force in the spring of 2010, which by autumn will make it possible to issue 20,000 titles from among the "frozen" ones.
Who benefits?
It is worth noting that buyers who want to profit from investments in real estate in Cyprus, as a rule, do not issue Title Deeds. There are two reasons for this.
Firstly, a foreigner and his family can receive a Title Deed for only one real estate object – an apartment, house or land plot for building a house, not exceeding 4,014 sq. m. In area. At the same time, the number of purchase and sale agreements that a foreigner can register is unlimited, and investors are often interested in acquiring immediately multiple objects.
Secondly, the state fee paid upon receipt of Title Deeds is quite large, and it is much more profitable for the investor to resell the object without spending this money, especially since he has a considerable period of 33 years for this. It is only important to choose a developer who does not restrict the buyer's right to dispose of his property.