Are Cyprus Title Deeds a show-stopper?

At a time of many news-worthy stories in Cyprus, does the Cyprus Title Deeds issue have to be a show-stopper?

Cyprus has been a favourite holiday destination for many and an ideal place to buy a holiday home.

Property market

Whilst many countries have suffered as a result of buyers becoming far more cautious about buying property abroad, Cyprus is no different and has had some other newsworthy stories to deal with as well.

The recent launch of a property index by RICS has helped get a feel for market pricing. It shows that Overseas buying in the first few months of 2010 decreased by about 80%, compared to 2005-2008.

But as with many other markets around the World, it is the areas driven more by local domestic demand, that seem to have proved more resilient. Average property prices are spread evenly across the island, even though higher rental income can be commanded in less traditional tourist areas e.g Limassol – as an urban centre and benefiting from a commercial port, it attracts more Overseas businesses and this contributes to driving resident worker demand for housing.

Banks too have become more cautious about lending, as in many other markets around the World. Although currently there seem to be decent mortgage deals at about 4-6% interest rates, depending on the amount of borrowing required.

North - South Divide

So all this at a time when the situation in Northern Cyprus is looking more un-resolved. Reunification looks more of a distant dream, with the Turkish Cypriots’ election of a nationalist leader, Dervis Eroglu, as president in northern Cyprus. North Cyprus has been split from the Greek Cypriot South of the island since the Turkish intervention in 1974 and is recognised as a state only by Ankara, Turkey

Eroglu does not appear willing to concede much in order to reach an agreement with the Greek Cypriots and this could spell an end to hopes of reconciliation, that were being bandied about, up until recently. He favours two independent States.

The outcome of the talks is crucial to Turkey’s European Union membership bid. Greek Cypriots, could veto Turkish accession while the island remains divided. This seems to point to sticking with Southern Cyprus for now, when thinking about buying property.

Title Deeds

And there are rumblings of unease over the buying process in Cyprus, which has been unsettling for some. So whilst there is not much we can do about the property picture in Cyprus and the politics, there are some things buyers can do to help themselves over Cyprus title deeds.

Generally speaking Government services in Cyprus are slow and paperwork can take a while, in the rumblings of bureaucracy. During the time that the Title Deeds have not been registered, the buyer can be vulnerable, dependent on how they have gone about registering their “Title” to the property.

April saw the first ever case of compensation awarded for a lawyer’s negligence by the Supreme Court.  The Supreme Court ruled that Paphos lawyer Nicos Papacleovoulou had negligently carried out his duties for a British couple in a property transaction in 1999 and was ordered to pay €120,000 to the couple for money lost as a result of the transaction.

This is the first ever case involving a lawyer’s negligence and sets a precedent in that a lawyer agreed to represent clients suing another lawyer. The Supreme Court laid out, again for the first time, the duties and obligations of legal professionals in property transactions, so providing a warning to lawyers who adopted unsafe practices in the past, specifically relating to searches in property transactions.

That being said, it is best to ensure you are well- positioned at the out-set.

There are some steps that can be taken to reduce the risk of Title Deeds taking a while to be registered in the buyer’s name:

• Ensure your legal advisor conducts a full search at the Land Registry Office to make sure the Title is clean and that no existing mortgages exist on the property or land. This will also disclose if any other previous contract of sale has been lodged.
• Use an independent Lawyer who can then deposit the agreement at the Land Registry office immediately the sales contract is signed. Things can take longer and become a bit confused when the Developer’s lawyer is used, as it may be in the Developer’s interest to have a slow registration process. E.g. they might seek to gain from an owner’s re-sale, if they still have the deeds, whereas if they are promptly lodged and registered, there is minimal scope for this. That is not to say all Developers act in this way.
• Include in the contract of sale, a paragraph that gives the buyer the right to sell on, so that the developer cannot object at a later stage
• Get a Companies Registry check done, to establish the financial standing of the developer in question
• To maximise protection it is advisable to ensure a “Specific Performance “ clause is inserted in the sales contract, before it is deposited at the Land Registry (within 2 months of signing the contract) which means that the change in Title should be registered more quickly and prevent the seller from transferring, or re-mortgaging the property.

^{Whilst there is no fail-safe method for buying property, some simple basic precautions can go a long way to ensuring the buying process runs as smoothly as possible. So Title Deeds do not have to be a show-stopper.}

^{NB: Map courtesy of Lonely Planet}

^{Posted by Louise Reynolds 4th May '10}  

^{Another of Louise's articles, along similar lines to this Cyprus article has also been published at Buy Association, click here}

Property Venture^® is an independent, UK-based agent. We help time-strapped investors and holiday home purchasers, buy abroad by guiding through the buying process, so reducing the hassle. We visit the countries you buy in, so we can offer common-sense, grounded advice. Overseas members of NAEA. This means we have been subjected to the membership criteria and have signed up to follow the professional Code of Conduct established to help you, the potential buyer or investor, buy property with confidence