ARMAGEA developers

LEGAL INFORMATION

The legal system in Cyprus is modelled on the UK system, and by comparison to other countries such as France and Spain the property purchasing process is relatively straight-forward. The other main benefit is that all transactions are conducted in the English language, and 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 EU citizens who have permanent residence in Cyprus are allowed to acquire property without any 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 permanently living in Cyprus and non E.U citizens

EU citizens who are not permanent residents of Cyprus and non EU residents wishing to purchase immovable property in Cyprus are obliged to adhere to special formalities and are restricted by certain regulations.

given permission to buy only one apartment or house or a building plot or land. In the case of EU citizens the property size can be unlimited and in the case of non EU citizens it can be up to 4,014 square meters (the equivalent of three donums).

The restrictions applied for EU citizens not residing in Cyprus will cease after 2009 and all citizens of the EU will be treated as equal to Cypriot citizens, regardless of their residential status.

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 every district, in order for the procedure 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:

1. Transfer of a title deed;
2. Long lease for periods of more than 33 years;
3. The acquisition of shares in a company that owns immovable property, if such acquisition results in the company being controlled by foreigners;
4. 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:

1. No criminal record in their country or Cyprus;
2. The financial means to support themselves in Cyprus (an income of Euro 20,503 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 to be foreigners. Regarding citizens of the EU not residing in Cyprus, there is a transitional period until May 2009, after which, they will be 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, although as mentioned after May 2009 this cannot be imposed.

Specific Performance - Legal Safeguard for the Purchaser

For the purchaser's protection the Land Registry in Cyprus provides a simple and effective legal instrument called "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 seperate 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 by anyone without your consent, and therefore the property is legally registered in law as unequivocally belonging to the purchaser, it cannot be leased, sold, transferred 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 seperate Title Deeds to avoid paying any Transfer Fees!