The amended Sale of Property (Specific Performance) Law (Law N. 132/(I)/2023) came into force on 12/12/2023, aiming to protect buyers' interests by ensuring the property transfer upon the Purchaser's fulfilment of contractual obligations.
We set out below some of the key provisions of the amendment:
Submission of a Search Certificate
The Sellers are obliged to include an immovable property Search Certificate as an appendix to the sale agreement. This Certificate, issued by the Cyprus Department of Lands and Surveys (DLS), contains detailed information about any encumbrances on the property. The Certificate must be dated no later than five working days from the day the sale agreement is executed.
Fine for Non-Compliance with Search Certificate Requirement
In the event of non-compliance with the requirement to submit a Search Certificate, the Director of the Cyprus Department of Lands and Surveys (DLS) is authorized to impose administrative fines on the Seller amounting to €10.000.
Mortgaged Properties
If the property has an existing mortgage or if another sale agreement has already been submitted to the Department of Lands and Surveys, the new sale agreement can only be submitted if it includes one of the following additional documents:
- TYPE A: Both the Mortgagee and the Seller are required to sign a Type A declaration. This declaration commits them to issuing a confirmation (Form B) once 95% of the agreed purchase price is deposited into a specified Seller's bank account. Upon issuing Form B, the mortgagee is obligated to waive or extinguish the mortgage on the property.
- TYPE C: Alternatively, the Purchaser can choose to proceed without Type A by signing Type C indicating their decision to deposit the sale agreement without the protections provided by Type A.
Any payment made by the Purchaser into the Seller's specified bank account, as specified in Form A, will be considered part of the purchase price. If an advance payment is made before or during the contract signing, it must also be deposited into this designated account.
Upon receipt and acceptance of the agreed amount by the mortgagee, Form B confirming the payment must be issued to the Purchaser. Subsequently, the mortgagee is obligated to release the mortgage from the property. Failure to fulfill this obligation may lead to an administrative fine of up to €100,000 imposed by the Director of the Department of Lands and Surveys.
Ensuring Legal Certainty and Transparency
To enhance legal certainty and transparency, Sellers must disclose any existing mortgages or contracts executed before or during the period between the date of the last Search Certificate and the current transaction. This requirement prevents fraud, inconvenience, and unexpected costs for Purchasers, particularly in cases where developers mortgage a portion of the land for another buyer's loan.
Conclusion
The amendments ensure the safe transfer of Title Deeds, addressing challenges faced by Purchasers and enhancing legal security in real estate transactions. The framework guarantees that properties are transferred to Purchasers free from encumbrances and that the Purchaser's payment contributes directly to resolving any existing mortgages.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.