Buying a property is a process that requires careful attention on the part of the buyer to avoid unpleasant situations.
In the process of selecting the right property, it is important that the interested buyer is aware of all the rights and restrictions associated with the property. The more information an interested buyer has, the more informed the decision will be.
There are three main ways to purchase real estate:
- Buying real estate with a direct transfer of Title.
- Buying a property using a Sale Purchase Agreement.
- Buying the property from the current purchaser (non-owner) by transfer of Title using a Sale Purchase Agreement.
Before making a final decision to purchase a property, one of the most important steps is to thoroughly check its legal cleanliness. This step is crucial to your protection and assurance that the property you are purchasing is not encumbered by legal or financial problems. We take a look at the key aspects to consider when checking a property for legal clearance and why this is so important for any potential buyer.
Request a TitleDeed on the property (TitleDeed)
The very first task is to check the property documents. Having a Title Deed on the property ensures that it is registered with the Cyprus Department of Lands and Surveys (DLS). For full information, it is worth requesting a recent Title Deed from the seller, which provides important information about the type and current condition of the property. Also, especially in the case of secondary properties, it is not unreasonable to ask:
- How long ago did the property change hands?
- How (inheritance, purchase, mortgage, gift)?
- Who was the previous owner (if such information is available)?
- If there are several owners - did they agree to the division of shares and did all owners consent to the transaction?
If no Title is available, an interested buyer should do additional research and possibly consult with a real estate expert. As a rule, when buying primary real estate with obtaining the Title is not a problem - the documents are handled by the developer, he also quite quickly gives them to the new owner. With secondary real estate everything is a little more complicated. Re-registration to the new owner may take time. If the selling party has recently bought the property, it may not have the Title in hand, as it is still being re-registered. As a rule, this is not a significant obstacle, but it will still add to the hassle.
Legal check of the property: encumbrances and liabilities
Encumbrances are another important point, which is checked documentally. As a rule, it is better to entrust this task to a specialist. If there are encumbrances, then the problem can be solved, but it will require some effort from the potential owner. You must make sure that the property is not encumbered by any monetary encumbrances, third party rights or any other legal obligations. To do this, ask the seller to provide you with a recent Certificate of Search issued by the Land Department, or request it from the office in person. This certificate clearly shows all the encumbrances, third party rights and encumbrances registered against the particular property. Also, independently research all the details of the property you are interested in on the Land Department's e-portal. The characteristics of all properties are in the public domain, and the Department's portal has a corresponding video explaining how to look for them.
As a result of looking at all the details, the property information described below should be available to you. If any information remains undisclosed, it is best to ask further questions of the seller:
- The registered square footage of the property.
- Whether there are any encumbrances such as liens, judgments (encumbrances resulting from a judgment), court order to sell the property, and other documents affecting the property.
- Whether there are any restrictions on the sale of the property imposed on the registered owner, such as a bankruptcy or liquidation order, an order prohibiting the owner from selling the property, etc.
- Whether there is legal access to the property (is the road paved, or is the property isolated).
- Whether any public road, trail, or river runs through it.
- Whether the property is affected by any foreclosure proceedings.
- Whether there are any development plans from competent city officials, such as a new road.
Find out if the property is subject to value-added tax (VAT)
Ask the seller to clarify whether VAT has to be paid and in what amount. The seller should check in advance with the tax authorities whether the sale is subject to VAT.
Find out what transfer fee you, as the buyer, will have to pay to the Department when the property is transferred to your name.
Certificate of Final Approval (CFA)
Especially when buying a secondary property, it is important to ask for a Certificate of Final Approval (CFA), which is issued by the Land Department. The buyer has no way of knowing if the extra room the seller is offering is actually legal or if you are inheriting the previous owner's problems with the authorities. Remodeling is acceptable, but only if it is fully confirmed and approved. Then the owner will have the relevant documents in hand. Otherwise, you can get a fine and a series of court proceedings. In the absence of such a certificate, it is better to seek advice from an architect-designer or real estate experts.
What do I need to check when buying a property resulting from a subdivision?
It is important to find out the following points:
- Whether the necessary permits are in place, such as: planning permission, building permit, or a derogated permit for the property. A derogated permit means that construction or certain work is permitted subject to exceptions or deviations from standard codes. This can occur when a construction company or developer is authorized to perform work despite some violations or deviations from established standards, but provided it is deemed acceptable and safe.
- How the subdivision took place, the number of owners, whether there is a Subdivision Agreement between them and whether it has been registered with the Land Department
- Ask if there are exclusive rights to use public areas such as parking lots, terraces, etc.
- Clarify your ownership share in the total share of the property and its public use areas.
- Whether there is an additional unused development ratio, especially in the case of private houses, and, if so, which owners are entitled to use it.
- The timetable for completion, approvals and ownership in the case of unfinished development and the consequences for the seller if the deadlines are not met.
It is important that your decision to purchase a property is based on sound criteria to avoid making the wrong choice. If all research has been completed and there are no financial or other obligations left, you should transfer ownership to yourself immediately after purchasing the property. You are advised not to pay the entire purchase amount of the property before the title is transferred into your name. If you decide to purchase the property but financial or other obligations remain, it is recommended that you execute and sign a Contract of Sale with the seller and file it with the Department.
If the property is being purchased from an existing buyer who has signed a Contract of Sale through a Deed of Transfer, find out if the Contract of Sale has been filed with the Department and if there are financial or other obligations to the seller and if there were any financial encumbrances before or after the Contract of Sale.
New properties (apartments and houses) under construction cannot be registered in the Land Department registry and do not have a Title. A Certificate of Completion from the Chief Engineer and a certificate from the relevant Construction Organization are required for registration. If the construction of the property has been completed but no title deeds have been issued yet, find out the reasons for the same.