DISREPUTABLE Cyprus property developers extort ‘contract cancellation fees’ from buyers wishing to sell their property before Title Deeds have been issued in the buyers’ name.
I have personally heard from some buyers who have been charged as much as CYP 20,000 (34,000 Euros) by these crooks for the privilege of selling a property they have bought and paid for in full.
Although earlier this year the Paphos District Court ordered a property developer to reimburse a British couple monies they were obliged to pay when they sold a house without Title Deeds, this did not set a precedent for other similar cases (such precedents can only be set in the High Court).
George Coucounis, a Larnaca-based lawyer specialising in Immovable Property Law, has entered the debate. In his opinion, ‘contract cancellation fees’ are illegal – and he urges the Cyprus Government to examine the matter with a view to ending this illegal practice.
(Unfortunately, it seems extremely unlikely that the Cyprus Government will be prepared to act as it has already given property buyers a “one finger salute” on the subject of illegal Immovable Property Tax demands).
Cancellation fees are illegally claimed
By George Coucounis
A MAJOR problem seems to be created by a number of greedy property developers, who insist on claiming cancellation fees from purchasers. The developers try to take advantage of buyers who wish to re-sell property purchased without a separate title deed.
Some of them rely on their dominant position to gain unlawful profit. Not only are cancellation fees illegal, but also some developers claim an enormous amount, which cannot even be justified to cover their administration expenses. They even claim cancellation fees near to the amount of the transfer fees and refuse to discuss their claim. This issue must be examined by the Commission for the Protection of Competition since it appears that there is an understanding and an agreement between many of the developers claiming cancellation fees and the buyers, as consumers, suffer. The issue must also be examined by the governmental authorities with an aim to end this illegal practice.
The situation is exacerbated by the fact that developers fail to issue separate title deeds on time, creating problems for buyers who cannot dispose freely of the property purchased and are stuck.
The developers take advantage of this and instead of facilitating the buyer to re-sell his property, they take the good opportunity to reap money they are not entitled to. It makes no difference if the buyer is an investor or has purchased the property for holidays or for residence purposes. The issue is that cancellation fees are illegally claimed without any consideration.
In most sales contracts there is a clause giving the buyer the freedom to re-sell his property, placing an obligation on the vendor to sign a cancellation agreement and a new contract of sale with the new buyer. Consequently, a customer who wishes to re-sell his property should refuse to pay cancellation fees and make the developer undertake his responsibilities under the sales contract and the law. If the developer keeps asking for cancellation fees, the initial buyer (owner) should warn him, in writing, that if the re-sale is not concluded, he will be held responsible for damages, for breach of contract and for the buyer’s losses and damages. The buyer must consider the re-sale clause as an essential term of the sale contract and rely on it.
Good advice to new buyers is to refuse to sign a sales contract without a clause clearly stating that the developer will not be entitled to claim cancellation fees if the buyer re-sells his property at any time. Such a clause indicates the credibility of the developer regarding his future intentions of claiming cancellation fees or not. A developer who refuses to include such a clause should be avoided. The real estate market offers a great deal of properties adequate to meet the needs of any individual new buyer.
The current economic crisis should have made developers think professionally and be worried of the situation instead of being short-sighted and looking to gain a temporary and unjust profit.
Many developers correctly spend a lot of money on marketing and promotion and some, instead of being firm, protecting their reputation and the property market, later behave arrogantly and greedily claim more money by way of cancellation fees.
The issue must be examined seriously by their associations, and action must be taken so that no member will claim cancellation fees and furthermore, to undertake at any time to facilitate a buyer to re-sell his property before the issue of the separate title deeds.
A buyer will then know from the outset that by purchasing a property in Cyprus, apart from making a good investment, he will always be free to sell it and the non-issuance of separate title deeds will not be a problem.
Copyright © Cyprus Mail 2008
Editor’s Note
George Coucounis says that buyers should refuse to sign a sales contract without a clause clearly stating that the developer will not be entitled to claim cancellation fees if the buyer chooses to sells his property at any time.
Such a clause would look something like the following:
“If at any time after the signing of the present agreement the Purchasers desires to sell the said Property, they will have an absolute right in doing so as they are deemed to be the beneficial owners of the Property providing that the Purchasers have fulfilled all their obligations as herein provided. The Vendors shall be obliged and cannot in any way object to and /or deny and/or withhold their consent to sign any necessary cancellation contract and new contract of sale with the new purchaser/s”
I cannot emphasise more strongly that when buying property in Cyprus you MUST NOT sign any papers or hand over any money until you have taken independent legal advice.
