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29 June 2022

Property management agreement in Cyprus

When there is an extra property, but there is no time to rent it out, you can find an assistant!

Let's talk about a real estate management agreement. 

Such an agreement is primarily needed by a person who wants to manage someone else's property and have to sign any documents on behalf of the owner. For the latter, this is also a guarantee that the property manager will perform exactly the functions that both parties have subscribed to.

In Cyprus, the minimum term of a real estate management Contract is 12 months, the maximum is 5 years. After the expiration date, it can be extended or canceled. Of course, the right of ownership remains inviolable in any case.

The best way if you c can ontact a property management agency.

Many developers in Cyprus also have their own management firms for new buildings. Some real estate agencies take over the management of real estate purchased through them. But it is not uncommon for locals to entrust management to close friends or relatives. In any case, such a transaction is necessarily supported by a real estate management agreement.

The best real estate agency in Cyprus

By the way, the future tenant should be able to contact the owner directly and make sure that the transaction is clean before paying the deposit and rent. But the lease agreement should be concluded with the person managing the property. In addition, the real estate manager must have a copy of the Purchase and Sale Agreement registered with the Cyprus Land Department in the name of the owner of the property.

Real estate managers carefully check the documentation of landlords, so tenants do not have to call the owners all the time.

According to the DOM Real Estate specialists, clients rarely asks for a real estate management agreement, but in the case of renting from a private person, it is better to check everything carefully. 

In short, the essence of the real estate management agreement is to protect the interests of the owner and the manager in a mutually beneficial relationship. 

Property owners should be sure that they understand their duties, the duties of the manager and that they will be truly protected in case the latter does not fulfill their obligations. 

Information that should contain real estate management agreement

  1. The address of the property. 
  2. A list of everything important placed in the property. The property layout attached to the contract will be a big plus.
  3. Details of the parties. The full name of the owner of the property and the person to whose account wlll be used. Passport data of the parties.
  4. Bank accounts data for transferring money.
  5. If the transaction involves remuneration of the manager, the contract should specify their exact size, format, timing and payment procedure.
  6. Responsibility of the owner and manager. For example, the owner must cover current expenses. And the manager is responsible for the losses caused, unless he proves that these losses occurred due to force majeure, natural wear and tear, or due to the actions or inaction of the owner of the property.  
  7. Be sure to specify the validity period of the contract. In Cyprus, the minimum period for this service is one year. 
  8. Conditions for premature termination of the contract and conditions for its extension. 

Rights and obligations of a property manager

The functions of the manager may vary depending on the needs of the customer, with a standard set for rent management includes:

  1. The manager is responsible for the property and, accordingly, has the right to visit it when it is really necessary.
  2. They can rent out property (all actions, from finding a tenant to signing a contract and monitoring utility bills).
  3. They can pay monthly and annual bills, taxes and insurance.
  4. They can and they must maintain the house and the surrounding area in good condition.
  5. They can reimbursement of expenses incurred by them in the process of real estate management.
  6. They can demand the elimination of the violation of the rights of the manager from any third parties. That is, the management company is not directly responsible for the negligence of the staff hired by it and the actions of the tenant. 
  7. An important responsibility of the manager is to provide a high-quality report to the owner about their activities. Providing a detailed breakdown of payments and the total amount for all services that are provided. 

It should be noted that in the case of registration of lease management, the contract often specifies the right to real estate insurance and large-scale repairs. In this case, the manager is obliged to notify the owner in advance of the need for large financial costs. 

Sometimes it is also useful to specify what the manager should not do. For example, not to organize viewing of real estate when there are other tenants living.

Rights and obligations of the property owner

It is important that the contract includes clauses defining the owner's expectations and what he is not recommended to do:

  1. The owner is obliged to transfer their property to the management according to the act of acceptance and transfer (alas, in practice few people do it, but it is better not to be lazy and arrange everything correctly).
  2. They must warn about the encumbrance of property, if it is such.
  3. The owner is responsible for opening an account and maintaining a minimum balance for servicing the property.
  4. The owner has the right to income from the property held in trust.
  5. Restrictions for the owner. For example, it is advisable to indicate that he cannot search for tenants on his own. Placing ads about vacant properties and checking landlords is the manager's concern. It is not recommended to visit the property without notifying the manager.

An important condition for the execution of a real estate management Contract in Cyprus is that the rental profit is legal. 

Who in Cyprus has the right to rent out real estate:

  1. all adult citizens of Cyprus and EU/EEA
  2. foreigners who have the right to receive income in Cyprus
  3. real estate management companies that rent out housing on behalf of the owner
  4. real estate agencies.

Pros and cons of renting out real estate

An extra property can bring the owner a stable monthly income. 

At the same time, not all real estate is very profitable, but this is not a reason to refuse to rent it out, because every house needs a caring owner and love. 

The undoubted and main advantage is that rented real estate is always looked after to one degree or another. A conscientious tenant will make the property only better: they will breathe life into it and will not let it "sour" from long downtime.

If there is no tenant, the care of the property to maintain its presentation is solely on the shoulders of the manager.

An important sign of the high quality of the manager or management company is the presence of an extensive database of contractors and experts who are ready to troubleshoot problems and solve any issue as soon as possible. For example, to fix the air conditioning, plumbing, clean the pool or even help with the organization of a holiday on the territory of a residential complex. If the tenant suddenly decided to move out, the experts of such companies promptly find a new tenant.

A pleasant bonus from renting out real estate is financial profit.

At the same time, the income is up to 10% per annum. High-quality housing stock in Cyprus is always in demand. In tourist areas on the first line, the profit is 2-3% higher. The amount of rental income is related to the location of houses, seasonality and the general situation in the real estate market. From the amount of profit, you will have to deduct the costs of building maintenance, cleaning, cosmetic repairs, interior, taxes and so on. 

The disadvantage of renting is that the process still requires time and financial costs from the landlord: you need to pay income tax, promptly solve problems in the premises, with a long-term lease, certify the contract with the district mukhtaris or notary, reissue water and electricity to the tenant.

If you still decide to rent out your property with the support of the property manager, try to find time to compose the real estate management contract, but not only a power of attorney. From a legal point of view, the contract is much more reliable.

Quickly rent or sell your property in Cyprus.

Interested in buying a property in Cyprus? Welcome to the DOM website! Here you will find options for houses and apartments in Limassol, Paphos, Larnaca and Famagusta, as well as get the help of experienced specialists.

See also:

  1. How to make a cozy apartment in Cyprus: 6 tips for landlords
  2. Medical tourism in Cyprus
  3. Paphos or Limassol: all the pros and cons
  4. 10 reasons to move to live in Cyprus with children
  5. The path of Plus Properties in Cyprus
  6. Furniture rearrangement is a great alternative to apartment renovation
  7. What should I do if tenants violate the rules of renting in Cyprus or do not want to move out at all?
Source: DOM
Photos: DOM
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Майя П 05.04.2023 in 12:14
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