Acquisition of Immovable Property in Cyprus.1. INTRODUCTION In almost all countries it is usual to regulate and control the acquisition and ownership of immovable property In all the civil law systems, immovable property is the equivalent of "real property" in common law systems, i.e. it is land or any permanent feature or structure above or below the surface. by aliens. The measure and extent of such regulation and control is dictated by the local conditions of each country and by matters of policy on various relevant aspects. In the case of Cyprus, the restrictions are obviously dictated by the following main considerations: Avoidance of extensive and disproportionate dis·pro·por·tion·ate adj. Out of proportion, as in size, shape, or amount. dis  pro·por alien ownership on an
uncontrolled and unrestricted scale, which might lead to an artificial
and unjustified rise in prices and in all other relevant costs (
including construction and consumption) to the detriment Any loss or harm to a person or property; relinquishment of a legal right, benefit, or something of value.Detriment is most frequently applied to contract formation, since it is an essential element of consideration, which is a prerequisite of a legally enforceable contract. of the economy and the local population. Avoidance of alien individuals and firms entering into the field of competition and exploitation of immovable property to the detriment of local entrepreneurs; Prevention of undesirable elements from gaining a hold in the country. Nevertheless, government policy in this matter is encouraging in all bona fide [Latin, In good faith.] Honest; genuine; actual; authentic; acting without the intention of defrauding. A bona fide purchaser is one who purchases property for a valuable consideration that is inducement for entering into a contract and without suspicion of being cases. This is evidenced both by the existence of tax incentives and by the general efforts for promoting tourism and for turning Cyprus into a financial centre, not to mention the traditional and characteristic hospitality of the country. The following information concentrates on the acquisition of immovable property for residence of office space and not for business investments. The original Law regulating this subject was enacted in 1936 at a time when Cyprus was a British Colony, us the Immovable Property Acquisition (Aliens) Law Cap.109. At the time a British subject In British nationality law, the term British subject has at different times had different meanings. The current definition of the term British subject is contained in the British Nationality Act 1981. was not an "alien" or foreigner Foreigner All institutions and individuals living outside the United States, including US citizens living abroad, and branches, subsidiaries, and other affiliates abroad of US banks and business concerns; also central governments, central banks, and other official institutions of . Subsequently however, since Cyprus gained it's independence in 1960, British subjects, other than Cypriots, became foreigners Foreigners alienage the condition of being an alien. androlepsy Law. the seizure of foreign subjects to enforce a claim for justice or other right against their nation. gypsyologist, gipsyologist Rare. . 2. RESTRICTIONS IMPOSED No foreigner may acquire immovable property in Cyprus, other than by reason of death without the prior permission of the Council of Ministers. In view of the use in the Law of the words "otherwise than by reason of death", it is submitted that a foreigner may acquire immovable property without permission if he has inherited inherited received by inheritance. inherited achondroplastic dwarfism see achondroplastic dwarfism. inherited combined immunodeficiency see combined immune deficiency syndrome (disease). it as a legal heir, or if it has been bequeathed to him as a legatee A person who receives Personal Property through a will. The term legatee is often used to denote those who inherit under a will without any distinction between real property and personal property, but technically, a devisee in a will. 2(a) Who is an alien? In order to clarify the above restriction, it is important to interpret the word "Alien" as provided for in the present law. An alien is defined in section 2 of the Cap.109 as an individual who is not a Citizen of the Republic of Cyprus including: a company controlled by aliens foreign company and A trust in which any alien is a beneficiary beneficiary Person or entity (e.g., a charity or estate) that receives a benefit from something (e.g., a trust, life-insurance policy, or contract). A primary beneficiary receives proceeds from a trust or insurance policy before any other. Further, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. section 2, an alien is an individual who is not a Citizen of the Republic of Cyprus but not including: Alien Cypriot Alien wife of a citizen who is not separated from her husband by virtue of an order of a competent court. EU member who has permanent residence in Cyprus EU member who does not have permanent residence in Cyprus. Such category of people can acquire immovable property except for a secondary residence where a permit is required first. Legal entities incorporated according to the laws of an EU state and who has its seat, its central administration or main foundation in Cyprus Legal entites incorporated according to the laws of an EU state and who has its seat, its central administration or main foundation in an EU state. Such category of legal entity can acquire immovable property except for a secondary residence where a permit is required first. EU members and companies can acquire and invest in any type of property and will be treated as ordinary Cypriots after May 2009. The term "Alien Cypriot" is further defined to mean a person, not a citizen of Cyprus, who was born in Cyprus at the time when his parents were ordinarily or·di·nar·i·ly adv. 1. As a general rule; usually: ordinarily home by six. 2. In the commonplace or usual manner: ordinarily dressed pedestrians on the street. resident in Cyprus or whose father was born in Cyprus at the time when his parents were ordinarily resident in Cyprus and it includes an alien wife of alien Cypriot who is not separated from her husband by virtue of competent court. This provision is significant as it allows complete freedom of acquisition of immovable property in Cyprus by Cypriots who have emigrated years ago. 4. ACQUISITION Acquisition under the Law, not only covers outright purchase of property but also the following transactions by foreigners: Those leases of immovable property which extend for a term of more than thirty-three years or which contain a provision lengthening lengthening (lengkˑ·the·ning), n the use of various massage or muscle energy techniques to relax and stretch muscle and connective tissue. such period through the exercise of a unilateral unilateral /uni·lat·er·al/ (-lat´er-al) affecting only one side. u·ni·lat·er·al adj. On, having, or confined to only one side. option of extension or renewal; Acquisition of shares in a Cyprus registered company which owns immovable property in Cyprus, if such acquisition itself or in conjunction with other shares already held by aliens in that company, would turn such company into an "alien controlled" company in the sense described above. The creation of a trust in favour of an alien which relates, wholly or partly, to immovable property in Cyprus, leases as above or shares in an alien controlled company or in a company becoming alien controlled by the creation of a trust. It should also be pointed out that the giving, otherwise than by will, or the sale and transfer of immovable property or shares, or the assignment of leases amounts to "acquisition" as far as the transferee or assignee assignee (assign) n. a person to whom property is transferred by sale or gift, particularly real property. (See: assign) ASSIGNEE. One to whom an assignment has been made. 2. is concerned and requires permission. However the law provides that the Council of Ministers in granting permission in the first instance may include a provision in the permit, to the effect that no further permission would be required for the transfer of the property to another foreigner, if the transfer is consistent with such conditions, if any, which might be inserted in the permit and in connection with transfers. A general condition relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc transfers of immovable property held by foreigners either to other foreigners or not, is that contained in regulations made under the Law. These provide that the minimum extent to which an alien may for purposes of sale, divide immovable property held by him, is into plots of not less than 1 ' donums unless the Council of Ministers otherwise allows. 5. GOVERNMENT POLICY WITH REGARD TO PERMISSION FOR ACQUISITION: (a) Business Investment Purposes This may be granted only for industrial or tourist investment. Permission is not normally granted for investments in agriculture or estate development (b) Individuals This will be granted as a rule, in all bona fide cases where foreign individuals acquire a flat or house or a piece of land for the erection erection /erec·tion/ (e-rek´shun) the condition of being rigid and elevated, as erectile tissue when filled with blood. e·rec·tion n. 1. of a house, intended for residence either regularly or when coming to Cyprus for holidays or other stays. The same individual cannot obtain permission for more than one property. Furthermore, no second permission will be granted to the other spouse or to their children unless in the latter case it is for their own actual residence or stay. In the case of unbuilt land, the area allowed would usually be between one to two donums, which is ample for the erection of a luxurious house or villa and its garages, swimming pools and other outbuildings. Acquisition of land for the creation of a farm would normally be refused if the farm is intended for commercial exploitation, but small farms for the use of the owners are borderline cases borderline case n → Grenzfall m . (c) Company Uses Permission will usually be granted to a company for the acquisition of property for its own uses, such as office space, stores, residences for its directors or employees. (d) Generally In keeping with these principles it follows that, save in the case of approved business investment purposes, the policy is that permission would be granted in the case of intended personal or company use and not for the purpose of letting to others, commercial exploitation, profiteering prof·it·eer n. One who makes excessive profits on goods in short supply. intr.v. prof·it·eered, prof·it·eer·ing, prof·it·eers To make excessive profits on goods in short supply. or speculation. However, once the permission has been granted it is difficult to check or control the actual use, because though the policy is as described above, no conditions are imposed in the permit itself. The phenomenon of foreigners letting their flats when they are absent from Cyprus, usually to other foreigners, is rampant. It is also somewhat well organized through estate agencies, management and service companies and it is becoming clear that the Government will eventually attempt to control this development. A probable measure which it seems is being considered is the imposition The printing of pages on a single sheet of paper in a particular order so that they come out in the correct sequence when cut and folded. of conditions on the permit. Such conditions might allow a foreign owner when abroad to let to another foreigner, but the rent would have to be declared and paid in Cyprus from external funds External funds Funds originating from a source outside the corporation to increase cash flow and to aid in expansion efforts, e.g., bank loan or bond offering. external funds The funds that are raised from sources outside a firm. converted into Cyprus currency. The demand by foreigners for property especially flats, is continually increasing and consequently the number of pending applications for permission by the Council of Ministers is always high. It takes six to nine months or even longer for an application to be approved. 1. REASONS FOR INCREASE The reasons for the increase in the acquisition of immovable property by foreigners are many. Cyprus has always been an attractive place for residency A duration of stay required by state and local laws that entitles a person to the legal protection and benefits provided by applicable statutes. States have required state residency for a variety of rights, including the right to vote, the right to run for public office, the or merely for holidays and its attractions include: An exceptional climate with mild winters and long, dry summers. Fresh and flavorsome food. A civilized civ·i·lized adj. 1. Having a highly developed society and culture. 2. Showing evidence of moral and intellectual advancement; humane, ethical, and reasonable: and pleasant environment boasting boast 1 v. boast·ed, boast·ing, boasts v.intr. To glorify oneself in speech; talk in a self-admiring way. v.tr. 1. To speak of with excessive pride. 2. modern facilities Efficient services including medical and legal services legal services n. the work performed by a lawyer for a client. A comparatively low cost of living as compared to some European countries Low crime rate A wide range of museums, antiquities Antiquities, nearly always used in the plural in this sense, is a term for objects from Antiquity, especially the civilizations of the Mediterranean: the Classical antiquity of Greece and Rome, Ancient Egypt and the other Ancient Near Eastern cultures. and historic sites. Friendly and hospitable hos·pi·ta·ble adj. 1. Disposed to treat guests with warmth and generosity. 2. Indicative of cordiality toward guests: a hospitable act. 3. local population. Pristine pris·tine adj. 1. a. Remaining in a pure state; uncorrupted by civilization. b. Remaining free from dirt or decay; clean: pristine mountain snow. 2. beaches and picturesque picturesque, term used in 18th-century England to refer to a landscape that looked as if it had come out of an academic painting. Used as derogatory criticism of such painting, the picturesque was considered pretty rather than beautiful. countryside. In addition, the removal of most restrictions since Cyprus's accession Coming into possession of a right or office; increase; augmentation; addition. The right to all that one's own property produces, whether that property be movable or immovable; and the right to that which is united to it by accession, either naturally or artificially. to the EU in May 2004 has resulted in a further influx of demand and market activity. This high demand, coupled with increased local needs, has naturally led to a rapid rise in prices and rents. However they continue to compare satisfactorily with other countries offering similar attractions. The capital appreciation of properties purchased is obviously considerable in view of the above circumstances and there is no sign of any adverse change unless a stage of saturation saturation, of an organic compound saturation, of an organic compound, condition occurring when its molecules contain no double or triple bonds and thus cannot undergo addition reactions. is reached. 6. PRECAUTIONS precautions Infectious disease The constellation of activities intended to minimize exposure to an infectious agent; precautions imply that the isolation of an infected Pt is optional, but not mandatory. TO TAKE In view of the above it is futile to give any indication of prices. It is important to enumerate To count or list one by one. For example, an enumerated data type defines a list of all possible values for a variable, and no other value can then be placed into it. See device enumeration and ENUM. and consider the steps and precautions which a foreigner should take when acquiring immovable property in Cyprus. Reliable and expert advice should, as a rule, be sought, to avoid exploitation on the one hand and legal complications on the other. There is a tendency to overcharge foreigners whenever possible and Cyprus is no exception to this rule. Reliable estate agents, valuers and surveyors should be used in order to ascertain what the proper price to be paid is. Commissions are, as a rule, payable to the estate agents by the sellers, but in order to obtain satisfactory results the purchaser may be required to pay a fee for having employed an estate agent. The use of reliable legal services is also required in order to ensure proper contracts and that proper steps are taken for obtaining the necessary permissions and to safeguard one's interest, including securing registration of property in one's name. As regards contracts, it must be noted that developers or land dealers usually have ready-made standard contracts which are, of course, drafted to suit their own interests and a close scrutiny of such contracts is required. The same people usually volunteer to undertake obtaining the necessary permissions. However, it is advisable ad·vis·a·ble adj. Worthy of being recommended or suggested; prudent. ad·vis a·bil for the lawyer of the
purchaser to look after this matter as the sellers, once they have got
an advance payment and very often full advance payment, do not have the
same interest as the purchaser in following the whole matter through as
speedily and as safely as possible.
Ownership in Cyprus is denoted by title deeds TITLE DEEDS. Those deeds which are evidences of the title of the owner of an estate. 2. The person who is entitled to the inheritance has a right to the possession of the title deeds. 1 arr. & Marsh. 653. , issued by the District Lands Office. All contracts must therefore provide for the transfer and registration of the property in the purchaser's name and for obtaining a title deed title deed Noun a document containing evidence of a person's legal right or title to property, esp. a house or land Noun 1. . When one buys a piece of land or a house, the seller as a rule must have a title deed in his own name which can be transferred to the purchaser. However, if one buys a flat, especially one still under construction, there is no title deed in existence for the flat and sometimes the seller does not have a title deed even for the land on which the building is being built because it may still be in the name of the original owner from whom the developer has purchased the property and to whom he still owes money. These are matters which the purchaser's lawyer must consider and embody em·bod·y tr.v. em·bod·ied, em·bod·y·ing, em·bod·ies 1. To give a bodily form to; incarnate. 2. To represent in bodily or material form: in the contract, as well as take such other steps as may be necessary so as to safeguard the interests of the purchaser. 7. CHECKLIST OF REQUIREMENTS Obtain reliable and expert local advice. Before entering into a contract carry out a search at the District Lands office to check whether there is already a title deed in the name of the seller in respect of the property to be purchased or, if not, whether the issue of such a title deed is legally feasible, as well as, in either case, whether the property is encumbered Encumbered A property owned by one party on which a second party reserves the right to make a valid claim, e.g., a bank's holding of a home mortgage encumbers property. in any way or not. If the property to be purchased is a piece of land, check: (a) Whether it has road access (without it, building is not possible); (b) If the land is included in any zone or area where building is restricted and, if so, to what extent it is restricted; (c) Whether it is subject to any street widening scheme; (d) Whether the supply of water and electricity is possible and at what expense. If the property to be purchased is a house or a flat, check whether there is a building permit and, if completed, whether a certificate or approval for the building has been obtained from the appropriate authority. In any case, check the possibilities or eventual availability of a telephone connection. Do not enter into a contract before being assured by the lawyer that the case is one in which the relevant permissions from the authorities would, as a rule, be granted. When entering into a contract, check that there are ample and proper provisions ensuring: (a) The eventual transfer of the property and the issue of a title deed free from any encumbrances; (b) That the contract is subject to obtaining the relevant permissions from the authorities (this is presumed in law but it is advisable to refer specifically to it, inserting provisions for the return of money paid if permission is not obtained); (c) That possession is delivered to the purchaser upon execution of the contract if the building is completed and, if not completed, upon completion; (d) That, in the case of a flat, there are general conditions attached to the contract, applicable to and binding on all other purchasers and users of flats or shops in the building, regulating their respective rights and obligations. Ensure that the contract is signed by the seller in the presence of two witnesses, themselves competent to contract, who have signed as attesting witnesses ATTESTING WITNESS. One who, upon being required by the parties to an instrument, signs his name to it to prove it, and for the purpose of identification. 2. . If the seller is a company, ensure that all corporate actions have been properly taken for the valid execution of the contract. As soon as practicable practicable adj. when something can be done or performed. after the execution of the contract ensure that: (a) An application is submitted to the local District Administration Office along with all necessary supporting documents for obtaining the permission of the Council of Ministers; (b) An application is made to the Central Bank of Cyprus The Central Bank of Cyprus (Greek: Kεντρικη Τραπεζα της Κυπρου, Turkish: Kıbrıs Merkez Bankasi for an exchange control permit, unless the purchaser, though an alien, is a resident for exchange control purposes and the seller is also a resident; (c) A copy of the contract is deposited with the District Lands Office within two months of its execution, thus ensuring that the contract becomes a charge on the property and that it may be specifically performed. As soon as practicable after the permissions under 10(a) and (b) above have been obtained, ensure the earliest possible transfer of the title deed through the District Lands Office, and if a separate title deed has not yet been issued ensure with the seller that this is done as quickly as possible. In the case of any breach in the contract ensure that a legal action is brought within six months from the date of the breach, after written notice. All the above matters should, of course, be looked after by the lawyer of the purchaser, but their enumeration 1. (mathematics) enumeration - A bijection with the natural numbers; a counted set. Compare well-ordered. 2. (programming) enumeration - enumerated type. and their following up by the purchaser himself is advisable and useful. Cyprus real estate Agents Circular buying property in Cyprus is now a safe proposition. Here is why: Since May 1987, the government of the Republic of Cyprus has passed legislation whereby all professional Real Estate Agents have to register with the Board for the registration of the Real Estate Agents of the Republic of Cyprus. To register and carry a professional licence to deal in real estate, an agent has to: Posses a thorough knowledge of the Cyprus law concerning immovable property and the ability to explain it to prospective clients. Have long term experience in dealing with real estate or be a university graduate in a subject concerning real estate. Possess an absolutely clean civic and criminal record. Never declare bankruptcy. Carry a professional insurance indemnity of minimum UK60 000. The latter safeguards prospective buyers so that, in the remote case the real estate agent misinforms a prospective client, the client has the right to sue the agent to be compensated accordingly. Needless to say only registered Cyprus Estate Agents carry this insurance. It pays you to buy from members of the Cyprus Real Estate Agents Association (CREAA) because all members of CREAA are registered and licensed estate agents and they all carry professional insurance. 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. Mr Christodoulos Vassiliades Ledra Management Limited Ledra House 15 Ayiou Pavlou Street Ayios Andreas Nicosia 1105 CYPRUS E-mail: corporate@vasslaw.net Click Here for related articles (c) Mondaq Ltd, 2006 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com |
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