The most frequent subject someone encounters when dealing with property transactions in Cyprus is surely the Title Deeds issue. Even though the Cyprus legal system is harmonized with EU Legislation, after Cyprus became part of EU in May 2004, there appears to be some form of ambiguity in connection to the title deeds issue and the procedures involved.
In many respects, the Cyprus Legal system is similar to the British Law, due to its colonial legacy, and Cyprus is one of the few countries that maintain an effective land registry system again based on the UK equivalent. Nevertheless, the title deed regime today, understandably, is not very clear to the layman.
WHAT ARE TITLE DEEDS?
A Title Deed is essentially a legal document verifying the ownership of immovable property. It is an integral part of Land Law and the conveyancing part of the law. This formal document is evidence of property ownership and includes details about the property’s legal characteristics such as location, size, and identification numbers.
Conveyancing a property involves the transfer of the title deed of that property from one person (legal or natural) to another, therefore transferring the ownership of the property. To carry out this transfer in Cyprus, the buyer and the seller (or their authorized representatives) must attend the District Lands Office, with the appropriate identification means.
The property’s Title Deed needs to be produced together with receipts confirming payment of various taxes for the property being transferred.
At the time of the transfer, the buyer is required to pay Property Transfer Fees. These are calculated on the Land Registry’s assessed market value of the property at its date of sale.
It should be noted that for the Transfer of Ownership in the name of a non-EU citizen a permit from the Council of Ministers is required.
SAFEGUARD FOR THE BUYER
Once the buyer enters into an agreement with the vendor (registered owner) for the purchase of immovable property, the agreement can be stamped and then lodged at the appropriate District Land Registry. Once the contract of sale is lodged at the Land Registry the specific performance right may be pursued by the buyer.
By depositing the contract in the Land Registry, the buyer prevents the owner from transferring the property elsewhere or changing it, for as long as the contract is valid and legally effective. No burdens, charges or encumbrances, can affect the right of specific performance after the contract has been deposited with the Land Registry.
Depositing a copy of the contract to the Land Registry gives the buyer the right to seek “specific performance” of the terms and conditions of the contract and thus to register the property onto the buyer’s name, even though the owner may not be willing to accommodate such procedures.
Although the transfer process is straightforward, situations have arisen that prevent a transfer taking place, for example, if a property developer has used the land on which they were building as collateral for loans to fund construction. These loans and any other debts prevent the transfer of the Title until they have been repaid and/or settled.
In other cases, Title Deeds could not be issued due to planning infringements that violated the various permits and permissions issued for a property’s construction and where the construction has encroached on land owned by a third party.
THE NEW LEGISLATION
In September 2015, the Cypriot Government amended the Immovable Property (Transfer and Mortgage) Law, No.9.1965, in order to assist property owners who were unable to get their Title Deeds despite fulfilling their contractual obligations with the seller. This was either because the property was mortgaged by the developer, or the state could not go ahead with the transfer due to outstanding taxes.
Trapped owners are a reference to home buyers who have completed their obligations, paid off their house but are unable to receive their title deeds because developers had mortgaged their properties to the banks.
The new law grants the head of the land registry department the authority to exempt, eliminate, transfer and cancel mortgages and other impediments, depending on the case and under certain conditions. This move has allowed many ‘trapped’ buyers without Title Deeds to submit an application and complete the official transfer of their property.
In order to qualify for Title Deeds under the new law, the contract of sale must have been deposited at the District Lands Office by 31.12.2014. If the contract was not submitted before this date or unknowingly removed, the applicant can apply to the Court for the issuance of an order to deposit the contract in accordance with the Sale of Property (Specific Performance) Law no. 81(I)/2011.
According to Government announcements, by 2010-2011 there were over 100,000 un-issued title deeds and, over the subsequent years, the Land Registry Department, albeit with limited resources, managed to drop that figure to 34,000.
HAS IT BEEN RESOLVED?
Following the introduction of the relevant legislation the Government managed to issue 2,500 out of the 14,000 over the last two years despite the recent court rulings that had taken the government unawares and that created a pending legal issue where Limassol and Paphos district courts ruled against the Director of the Land Registry to transfer the Title Deeds into the names of the purchasers following appeals by banks.
The courts, at a district level, ruled these amendments to be unconstitutional. Despite the court ruling the authorities will continue issuing title deeds for the remaining 11,500 properties and if needed will introduce legislative amendments to correct the problem.
There will be a final court ruling soon on the matter and hopefully, the title deed chapter will be fully resolved one way or another.
The acquisition of Title Deeds can be a complicated process and if in doubt seek professional advice.