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Avoid these pitfalls when buying a property in Cyprus

BUYING PROPERTY IN CYPRUS might be fraught with dangers. When buying property, potential buyers should exercise utmost caution, especially if the title deed is not easily available, which is a regular scenario when buying new property in Cyprus.

Many EU and non-EU high-net-worth individuals apply for citizenship or residency in Cyprus under the citizenship-by-investment scheme.

This update details the top ten problems to avoid when buying property in Cyprus, as well as how to make sure that your property acquisition goes successfully.

Failure to retain the services of a real property lawyer

The value of hiring a real property lawyer cannot be overstated. Signing a purchase contract offered by a developer is the most typical mistake people make (an all-too-common occurrence). These contracts are unlikely to safeguard the buyer and are frequently substantially skewed in favor of the developer.

Furthermore, buyers should be aware of lawyers that represent vendors or builders and are thus not impartial. Not appointing a lawyer is the same as not appointing one.

When buying property in Cyprus, the most crucial aspect is to hire a trustworthy lawyer who speaks the buyer’s language and is unaffected by the other parties engaged in the transaction. These possible problems can be avoided with the help of a qualified lawyer. In short, property is a significant investment that should not be made without the assistance of a qualified real property lawyer.

Make certain the property isn’t in the middle of a legal battle over ownership

Property that is to be purchased must not be the subject of an ownership dispute, which is typical in divorce cases. Purchasing property from a respected developer will help you avoid such a situation. This isn’t always the case, especially in recent years, when developers have stepped in to function as a middleman for resale houses (typically for properties which they have developed and sold to clients in the past).

Commissions that are not revealed

The most expensive risk when purchasing property is hidden commissions arranged between an agent or intermediary and the vendor (usually a developer). Commissions might be anywhere from 7% to 52% or more. Such expenditures can be avoided by hiring a respected lawyer who can give the necessary references to potential clients.

Failure to take into account all costs that are relevant

It’s critical to budget for the value-added tax (VAT) (nil, 6%, or 20%), transfer fees, stamp duty, legal costs, disbursements, and immovable property taxes that will be applicable for real estate acquisitions as soon as feasible.

Developers and advisers in Cyprus frequently misunderstand and misrepresent VAT. Property buyers who make uniformed VAT elections frequently find themselves unable to handle their properties as they wish or with hefty VAT liabilities.

Transferring a reservation money without first obtaining formal confirmation of the reservation terms

If a buyer is required to pay a reservation fee to a developer, the buyer should have it confirmed in writing, preferably by a lawyer.

what was the sum of money;

the conditions under which a refund will be given; and

The total cost of the property, which may be decreased in various cases.

Not conducting due diligence before signing a contract of sale

While lawyers are not obligated to perform due diligence on a regular basis, such as a mortgage check, a skilled lawyer should.

A particular performance law was enacted by the government in 2011 to give a contract of sale priority over any pre-existing mortgage; nonetheless, before to purchase, a check should be made to see whether any mortgages have been placed on the land to avoid future problems. Without considering the results of these searches, a contract of sale cannot be effectively drafted.

Additionally, even if developers give official extracts from the Land Registry and other government bodies, consumers should not rely on developers to do due diligence.

Not putting everything down on paper

Purchasers should double-check that all agreed-upon terms, including any agreed-upon extras, are included in the contract of sale. This should contain a list of any repairs or damages that are required.

Failure to make a deposit on the contract of sale

A contract of sale must be filed with the Land Registry within the legal deadline. If this is not done, the buyer will lose key legal rights. Furthermore, a contract of sale must be stamped within the legal deadline, or the buyer would be subject to fines.

Failure to pay attention to property-related material contracts

A property management agreement will be required for many luxury villas and flats, which is a service that many developers offer. This is a significant contract, and care should be taken to ensure that all terms and conditions are understood in order to ensure that the purchaser’s property is maintained and protected throughout any absences from Cyprus.

Making a will without a will is a mistake that many people commit.

All immovable property located in Cyprus is governed by Cyprus Law, which contains a compelled heirship component. Certain types of foreign buyers, however, have the right to circumvent these limitations and create a will that allows them to pass the property along as they see fit. When buying property in Cyprus, buyers should make a will right away.

Comment

It’s critical to learn from the mistakes of buyers who acquired property before the financial crisis in countries like Spain, Italy, France, Portugal, Greece, and Cyprus and are still fighting expensive legal fights. Despite this, according to HSBC’s latest research, the property dream is still alive, with millions of Chinese, Russian, British, and high-net-worth individuals considering buying overseas even more than before the financial crisis.

Avoiding these hazards in Cyprus is especially critical when investing in property as part of a citizenship-by-investment application, which normally involves a €2 million to €2.5 million investment.

If the following hazards are examined, the majority of the potential problems faced when buying property in Cyprus can be avoided. Above all, seeking independent legal counsel from a qualified lawyer is critical. All of the other dangers on this list should be avoided by a smart lawyer.