Legal
The legal system in Cyprus is modelled on the UK system, and by comparison to other countries such as France and Spain the property purchase process is relatively straight forward. The other main benefit is that all transactions are conducted in the English Language, and that your Contract of Sale document will be in English, so you will be able to read it at your leisure and have a valuable input about any specific details, such as terms of payment etc. Below you will find some useful legal information and details that should help you to understand the property purchasing process in Cyprus.
Cypriots and E.U. Citizens living in Cyprus
Under Cyprus Law, Cypriots or persons of Cypriot Origin as well as E.U. Citizens who have permanent residence in Cyprus are allowed to acquire property without restrictions. The residential status is ascertained by the District Offices and is obtained when a person resides in Cyprus for a total period of 183 days a year or more.
E.U Citizens not living in Cypus
As from May 2009 E.U Citizens not living in Cyprus are treated as equal to Cypriot Citizens, regardless of their residential status.
Non E.U Citizens
Non E.U Citizens wishing to purchase immovable property in Cyprus are obliged to adhere to special formalities and are restricted by certain regulations. They are given permission to buy only one apartment, house or building plot of land up to 4,014 square meters (the equivalent of three donums).
Permission to Buy
According to Cyprus Law, foreigners must obtain the permission of the Council of Ministers prior to the acquisition of real estate property. Recently these powers have been assigned to the pertinent authorities of each district in order for the operation to become speedier.
A foreigner (the law uses the term 'alien') is any person who is not a Citizen of the Republic, including an alien controlled company. The term does not include foreigners of Cypriot Origin or non Cypriot spouses of Citizens of the Republic.
The acquisition of real estate property in Cyprus includes:
- Transfer of a Title Deed;
- Long lease for periods of more than 33 years;
- The acquisition of shares in a company that owns immovable property, if such acquisition results in the company being controlled by foreigners;
- The establishment of a trust or any type of set-up, which is connected with the ownership of real estate, for the benefit of a foreigner, including tax benefits;
Although the proceedings for obtaining the permission might need a considerable amount of time to be fulfilled, purchasers are perfectly entitled to occupy their properties until then.
Furthermore, any contract for the purchase or lease of property is valid even if the Pertinent Authority rejects the foreigner's request for a permit. As such, when purchasing a property, it is advisable for the relevant contract to include provisions for such an event so as to secure a refund of any money paid or any other remedy (this is standard legal practice).
The application to the Pertinent Authority requires information about the personal details and financial standing of the applicant and particulars of the property and its present owner. Also it must be accompanied by a number of legal documents.
As a general rule permission is granted to bona fide applicants provided they have:
- No criminal record in their country or Cyprus;
- The financial means to support themselves in Cyprus (an income of 20,503 Euro per annum between a married couple is considered satisfactory).
As of May 1st 2004, citizens of the EU residing in Cyprus or Cyprus based companies controlled by citizens of a Member State are not considered foreigners. Regarding citizens of the E.U. not residing in Cyprus, there was a transitional period until May 2009, after which, they are now treated as equal to Cypriot Citizens, regardless of their residential status.
The above conditions and procedure may sound complicated and somewhat daunting, but it is a simple administration formality that your solicitor will arrange for you, the main purpose is to safeguard Cyprus from allowing foreigners to enter the country to reside who cannot financially support themselves, however as mentioned since May 2009 these restrictions can no longer be imposed on E.U. Citizens.
Specific Performance - Legal Safeguard for the Purchaser
When an individual Title Deed for a property is not yet available because for example it may be part of a larger parcel of land that has not yet been split into smaller units then the below safeguard is relevant. This enables the safe purchase of a property pending a separate Title Deed.
For the purchaser's protection the Land Registry in Cyprus provides a simple and effective legal instrument called the 'specific performance'. As soon as the Contract of Sale is signed and a deposit paid, then the Contract of Sale is registered and lodged at the District Land Registry Office, your Solicitor will do this for you. The procedure then protects the purchaser's ownership rights until the separate Title Deeds are finally issued and transfered into the purchaser's name. The Contract of Sale is in the hands of the Land Registry and cannot be withdrawn bby anyone without your consent, and therefore the property is legally registered in law as unequivocally belonging to the purchaser, it cannot be leased, sold, transfered, or mortgaged without the consent of the purchaser - only the purchaser can alter the property status. Indeed "Specific Performance" is particularly useful as many purchasers are more than happy to have the security it brings and delay the issuance of separate Title Deeds to avoid paying any Transfer Fees.
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