Introduction
The recent enactment of the Sale of Property (Specific Performance) Law N.132(I)/2023 (the Law), effective as of December 12, 2023, amends the Sale of Property (Specific Performance) Law Ν.81(Ι)/2011 and introduces notable changes to the legal framework governing immovable property transactions.
These amendments are designed to enhance buyer protection, ensure legal certainty, reduce fraud, and improve the efficiency of property transactions in Cyprus.
This article outlines the critical aspects of the new law, focusing on the mandatory submission of search certificates, handling of mortgaged properties, and the imposition of fines for non-compliance.
The revised Sale of Property (Specific Performance) Law (Law N. 132/(I)/2023) took effect on December 12, 2023, aiming to safeguard the interests of buyers by ensuring property transfers occur upon the purchaser fulfilling their contractual obligations.
Below are key provisions of the amendment:
Submission of a Search Certificate
Sellers are now legally required to append an immovable property search certificate to the sale agreement. This certificate, issued by the Cyprus Department of Lands and Surveys (DLS), provides detailed information about any encumbrances on the property. It must be dated no more than five working days before the execution of the sale agreement.
Fine for Non-Compliance with Search Certificate Requirement
If a seller fails to include the required search certificate, the Director of the Cyprus Department of Lands and Surveys (DLS) has the authority to impose an administrative fine of up to €10,000.
Mortgaged Properties
For properties with existing mortgages or previously lodged sale agreements, the new sale agreement must include one of the following additional documents:
• Type A Declaration: Both the mortgagee and the seller must sign this declaration. It commits them to issuing a confirmation (Form B) once 95% of the purchase price is deposited into a specified seller’s bank account. Upon issuing Form B, the mortgagee must release the mortgage on the property.
• Type C Declaration: Alternatively, the buyer can submit the sale agreement with a Type C declaration, acknowledging their decision to proceed without the protections of Type A.
Any payment made by the buyer into the seller’s specified bank account, as detailed in Form A, counts toward the purchase price. If an advance payment is made before or during the contract signing, it must also be deposited into this designated account. Once the mortgagee receives and accepts the agreed amount, they must issue Form B to the buyer, confirming the payment and releasing the mortgage from the property.
Failure to comply can result in an administrative fine of up to €100,000 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 last search certificate date and the current transaction. This requirement prevents fraud, inconvenience, and unexpected costs for buyers, especially in cases where developers mortgage a portion of the land for another buyer’s loan.
Conclusion
These amendments ensure the safe transfer of title deeds, addressing challenges faced by buyers and enhancing legal security in real estate transactions. The framework guarantees that properties are transferred to buyers free from encumbrances, ensuring that the buyer’s payment contributes directly to resolving any existing mortgages.
This article is for general informational purposes only and should not be construed as legal advice