Cyprus is one of the few countries in the world that maintains an effective land registry system in which all ‘immovable property’ (a term that relates to land and buildings, trees and plantations, rivers, wells, and all rights relating to land and buildings) is registered.
(The system used in Cyprus is very similar to the one used in the UK prior to its computerisation).
Title Deeds, which in Cyprus are also known as “Certificates of Registration of Immovable Property”, are formal documents that serve as evidence of property ownership. Each piece of immovable property has an associated Title Deed which contains information such as the registered owner of the property, its size, its location and the Lands’ Office reference. Conveyance of this document is required to transfer ownership of the property to another person.
The actual transfer of ownership is carried out by officials at the District Lands’ Office at completion, when the Title Deed is ready and available for transfer. At this time buyers pay the Property Transfer Fees, which are Cyprus’ equivalent of the UK Stamp Duty.
Why bother with Title Deeds?
Many expatriates claim that it is perfectly OK to buy a property without securing its Title Deed. Many of them boast about the money they’ve saved by not paying Property Transfer Fees and completing on their purchase.
So what are the benefits and disadvantages of not having your Title Deeds?
Benefits of not having Title Deeds
- On the plus side, you do not pay Property Transfer Fees to complete the purchase and have ownership of the property transferred to your name.
Disadvantages of not having Title Deeds
- You are unable to enjoy the full benefits of property ownership, including the right to transfer it to anyone you wish.
- As the property is not legally yours, you are not free to sell it to whoever you want without reference to its owner.
- Should you wish to sell, you have to come to an arrangement with its owner. This will require you to cancel your contract of sale which will enable the owner to enter into a new sale agreement with your buyer.
Note that an exorbitant contract cancellation fee is often demanded by the owner to render this simple service.
- Even though the assessed 1980 value of ‘your’ property falls below the CYP 100,000 threshold, its registered owner may require you to pay Immovable Property Tax.
- Although you may have paid for ‘your’ property in full, its registered owner may still be able to use the property as security to raise a loan.
If this happens you will find it difficult, if not impossible, to sell the property.
- Without a Title Deed you will be unable to use the property as collateral to raise money and unable to access any of the capital you have tied up in it through equity release schemes and other mechanisms.
- As the Cyprus financial institutions currently refuse to grant mortgages on resale properties without Title Deeds, anyone wishing to buy the property you have bought must be a cash buyer.
Unfortunately, some people continue to promote the view that Title Deeds are of no value and of little consequence.