Cyprus property buyers get increased legal protection
The legal protection offered to those property buyers in the Republic of Cyprus has been enhanced by amendments to ‘The Sale of Real Estate (Special Execution) Laws of 2011 to 2020’.
Among other things, the amendments require the vendor (seller) of the property to include a Search Certificate in the contract of sale, which must be dated no more than five working days before the contract was signed.
Furthermore, if the property is encumbered by a mortgage or an earlier contract, the Land Registry will only accept the deposit of the contract of sale for that property if it is accompanied by written declarations from the mortgagor(s) (typically a bank) and vendor(s), of which the buyer must have been informed in writing.
This change in the law will help ensure that those buying property are promptly and accurately advised of any mortgages and contracts encumbering the property.
The change will also help safeguard property buyers from potential fraud, particularly in cases where developers have mortgaged a share of the land on which they’re building to help secure home loans for other buyers on their developments.
The written declaration from the mortgagor outlines the details of the mortgage registered on the vendor’s property. It applies to contracts between the vendor and property buyers for the sale of the property or any units, apartments, or houses on the property.
If the vendor took out a mortgage to use for his own purposes (building the properties), the mortgagor confirms that depositing 95% of the contract amount into the vendor’s bank account will result in the mortgagor discharging the property from the mortgage. However, if the seller registered the mortgage to help another buyer to purchase unit(s), the declared amount is zero.
Once the mortgagor has discharged the property from the mortgage, the Land Registry transfers the property to the buyer’s name, unencumbered by the mortgage or any other encumbrances that may affect the property or its new owner.
Should the vendor or mortgagor fail in their legal obligations, the Director of the Land Registry has the power to impose fines on both parties of up to €10,000 and €100,000 respectively.
The changes in the law addresses the problems that resulted in property buyers becoming ‘trapped‘ and improves the legal security and transparency of property transactions. It ensures that properties are transferred to buyers free of any encumbrances and guarantees that the sale price paid by the buyer is used to settle any existing mortgages.
Read more at: https://www.news.cyprus-property-buyers.com/2024/01/30/cyprus-property-buyers-increased-legal-protection/id=00168432
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