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What can I anticipate from the legal process?

The legal system of Cyprus is straightforward and, in fact, founded on the rule of law. Here’s a step-by-step guide to what to expect:

Step One: If your offer is accepted, you may be requested to sign a reservation agreement, which, while not legally binding, demonstrates your intent to purchase. If you want a mortgage, the vendor should now withdraw the property from the market while your lawyer conducts some basic due diligence and the bank conducts its own valuation.

A small holding deposit is commonly required these days, and this is frequently paid directly to the vendor. You risk losing money if you just “change your mind,” so have a receipt set up by your lawyer saying that the deposit is “subject to satisfactory checks,” which will protect you. When paying the deposit, make sure you discuss the exchange rate with your currency specialist; the exchange rate is continuously changing, so even though the contract is in Euros, the price you pay in Sterling isn’t, which could cause problems down the road. The buyer’s and lawyer’s lawyers’ contact information is then exchanged.

Step 2: Your lawyer will now conduct checks to confirm that the property is clear of any outstanding debts. (It was standard practice in Cyprus in recent decades for developers to take out land mortgages and not repay them – in this situation, you would effectively own the home but not the land it sits on.)

A title search will be performed by the lawyer to ensure that the seller is the legal owner of the property and has the right to sell it. Boundary searches will be conducted, and all planning permissions will be confirmed.

At this time, a volunteer Plan Search at the local council can be good to see whether any other development is proposed in the vicinity.Although you won’t be able to ensure that a property will not be built directly in front of yours in a few years, it will assist to reduce your risk.

Step three: If you’re happy to proceed with the surveys and your lawyer hasn’t raised any concerns, you’ll go on to the Contract of Sale. This is the same as a contract exchange in the United Kingdom, and all relevant facts must be recorded.

If you are unable to go to Cyprus, you must provide your selected representative power of attorney to sign on your behalf. A nonrefundable deposit of between 10% and 30% will be required, so make sure you’re completely satisfied with the details before signing.

Step four: After both parties have signed the Sales Contract, your lawyer will file it with the District Land Registry Office. This precludes the seller from refinancing or selling the property to anybody else until the Title Deeds are obtained. This is called as Specific Performance Law, and it protects you in some ways until the deeds are issued.

Along with your registration, you will need to present bank and character references. You will also need to apply for a permit from the Council of Ministers as a non-Cypriot. Keep in mind that this could take a few months to complete.

Step 5: Funds must now be put in place in order to complete the sale. If you’re paying with a mortgage, your lender will handle the transfer of funds to the seller. If you pay in cash, the transfer will be handled by your currency exchange firm or bank.

Step 6: Because getting the final Title Deeds in Cyprus can be a lengthy process, this is where the Cyprus system differs from the UK system.

The Title Deeds may be available for instant transfer into your name in some situations. If this is the case, the Land Registry will receive the transfer fee, and you will have ‘finished’ in the UK sense.

In other circumstances, however, it may take months or even years for the Title Deeds to be issued. However, it is still normal practice in Cyprus to do so.Pay the remaining and live in the property while you wait for the move to be completed. Consult your lawyer to see if this is appropriate in your situation — new legislation have recently been introduced to ensure that Title Deeds are given directly to buyers.

Note that if you are purchasing a new property, you may be required to pay the purchase price in installments rather than all at once. Make sure you get bank guarantees for each payment in case there are any issues with the construction.

What should I be careful of in terms of potential pitfalls?

The process of buying a home in Cyprus should go easily if you choose an independent lawyer. Nonetheless, these are worth reading.

First, let’s look at some frequent pitfalls:

  1. buying a home on land that is still encumbered by a mortgage or does not have legal title. Despite the fact that the Cypriot government is working hard to prevent this from happening, it is still possible. Your lawyer must conduct thorough due diligence and background investigations on your developer.
  2. Failing to notice the state of your fixtures Although the property is supposed to be sold “as is,” astute developers have been known to swap out more expensive furnishings in the “show home” for more basic ones. Before signing the contract of sale, double-check that everything is in functioning order and that nothing has been substituted!
  3. Failure to comply with the terms of the contract of sale The Contract of Sale must be deposited and stamped by the Land Registry within a certain timeframe, according to Cypriot legislation. If you do not follow this, you will lose key legal rights.
  4. Incorrectly calculating the exchange rate when calculating the total purchase price The value of a currency fluctuates all the time. While this may be OK when buying vacation funds, it might become a major issue if the ultimate price of your property differs dramatically from the time you made your offer. Fixing your rate with a specialized foreign exchange business is an excellent idea.
  5. Rental limitations Non-resident owners who rent their property on a short-term or holiday basis are subject to rigorous regulations in Cyprus. When you apply to the Council of Ministers for approval to acquire, you must state that the property will not be utilized for “commercial purposes.” It’s advisable to seek legal guidance before purchasing property to rent out to the holiday market.

Is there anything else that I should think about?

The costs and considerations don’t end once you’ve finished building your property in Cyprus. To avoid any unpleasant surprises, make sure you calculate in future living and operating costs for your home. Take into account the following:

Taxes – Everyone who owns property in Cyprus, regardless of their status, must pay an annual Immovable Property Tax (IPT). Certain revenues, including pensions, are subject to taxation in Cyprus. Always seek the guidance of a certified tax professional.

Wills – A ‘forced heirship’ clause exists in Cypriot law. So, if you want your property to be handed on to someone who isn’t a part of this arrangement, make a formal will as soon as feasible.

Fix your money – It can be tough to predict your living expenses, especially in the ‘honeymoon period’ following your purchase! Once your costs are more predictable, you can look at exchanging your monthly budgets with a Specialist Foreign Exchange Service on a fixed contract to minimize any market fluctuations.

Preparing for the unforeseeable – Circumstances change in ways that we simply cannot predict. Are you able to return to the United Kingdom if you are needed immediately? Or, if you were left alone, would you be able to cope? It’s critical to think beyond the original property purchase and prepare for unexpected and future events.

Home Insurance – Think about how you’ll use your home in Cyprus (for example, sole occupancy or rental), and make sure you have enough coverage. Long-term vacant properties necessitate particular insurance.