Cypriot banks issued from 2003 to 2012 loans to individuals and companies without any problems.
The volume of issued loans increased from EUR 21 to 72.5 billion during this period. In early 2013, the Cyprus banking system was on the verge of collapse. Then the number of non-performing loans increased sharply in the country.
By 2015, a lot of real estate objects came into the possession of the banks of Cyprus, mainly as a result of the exchange of debt for assets or loss of the right to repurchase. Later they began to be bought out by financial companies, which are still reselling such housing. This trend is expected to continue.
Today you can find about 6 thousand collateralized properties worth about EUR 2.5 billion on the Cyprus property market.
Based on the number of properties on display owned by these organizations, we can safely say that they have a certain weight, since they are of interest to potential buyers.
It is worth noting that these financial companies pay more attention to sell collateral so the their price is not so high.
As for the purchase of this category of housing, it is practically no different from the purchase of any other property, with a few key exceptions that should be kept in mind.
The first step is to obtain an authorization letter from the owner of the property (bank or financial company), which gives the potential buyer the right to request and verify documents related to the property from various authorities. For example, the Department of Lands and Surveys or the Municipality.
The next step is to organize a meeting at which the potential buyer conducts an inspection of the property.
As long as interest in the property persists, the potential buyer must complete a tender form that applies to all properties offered for sale.
If the seller gives a positive answer, the contract preparation process begins. Since the seller is a regulated entity, the buyer must successfully complete the Know Your Customer (KYC) procedure. This is how the seller gets to know the buyer and ensures that they have nothing to worry about.
This is followed by a procedure aimed at combating money laundering and limiting offenders from converting illicit funds into legitimate proceeds (AML). In other words, the potential buyer must prove that the funds that will be used to buy the property come from a clean source of income. This is called Proof of Funds.
While all of this may seem overwhelming, the rise in regulatory requirements in the past few years has forced banks to strictly adhere to these rules in order to avoid further problems.
Upon completion of the KYC / AML process, a contract is signed and an advance payment of 20-30% is made.
The next step for the buyer is to pay the required taxes. The deal enters the final stage when the counterparties visit the Department of Lands and Surveys to transfer ownership of the property.
As mentioned earlier, the speed of completion of the transaction is essential for financial companies, since every day, as long as collateralized properties remain on their balance sheets, they incur additional costs. Therefore, banks and financial institutions usually set a specific time frame for which the resale process must be completed.
Therefore, a potential buyer should be prepared in advance before submitting their offer. Preparing the relevant permits in advance is even more important in cases where the buyer plans to borrow part of the amount to complete the transaction. Therefore, all the necessary documents for the KYC / AML process must be on hand.