ACCORDING to a recent media report 15,000 new Title Deeds were issued by the Land Registry between June 2009 and November 2010. Amazingly though, only 4,200 of these were transferred to their purchasers.
One might reasonably wonder: How is it possible for purchasers on the one hand to complain about the long delay in issuing Title Deeds and on the other hand to fail to complete the transfer to their names?
There are several possibilities for this situation:
- The new title is still burdened with mortgages and/or other impediments which the developer has failed to remove;
- the developer has not cleared his tax commitments;
- the purchaser has not paid the whole purchase amount; the purchaser is not available, as e.g. he has left Cyprus since the date of sale, or;
- the purchaser has resold or intends to resell the property.
In the last case the (not exactly legal) practice of «Cancellation Agreements» comes into play. By such agreements, which are signed by the developer and the first purchaser, the original Contract of Sale is cancelled and at the same time a new Contract of Sale is concluded between the developer and the second purchaser.
By this practice, both the developer and the first purchaser obtain financial benefits: The developer obtains a considerable amount of money as «cancellation fees» and the first purchaser avoids the payment of Transfer Fees, as the title is transferred directly to the name of the second purchaser.
Needless to say, the only loser in this case is the public purse which is deprived of a considerable amount of taxes (Transfer Fees and, in many cases, Capital Gains Tax).
It is worth mentioning that, even if the transfer is completed, if a long time has elapsed since the signing of the contract of sale, the public purse is still a loser, because the Transfer Fees and other taxes are estimated as at the date of the contract of sale, without any interest or other charges being added to this amount.
According to the same press release, the issuing of 120,000 Title Deeds for residential and other units which have been sold is still pending.
The Authorities are doing their best to accelerate the issue of Title Deeds. At the same time, a package of legislative amendments is under way, (known as «planning amnesty» package), aimed at easing the problem. One might ask what will be the practical result of this effort if, in spite of issuing Title Deeds, most of them are not transferred, for one reason or another.
It is for the benefit of all parties, including the State, that Title Deeds are issued promptly and that they are transferred without delay to their rightful owners/purchasers. In the long run, the practice of playing games either with the issuing or the transfer of titles is not to the benefit of anyone.
The holding of a title is the only real safeguard to a purchaser, as there is always the risk that the developer goes bankrupt or that the property is burdened with such encumbrances that make the transfer of the title impossible.
It is up to the authorities, who are the main losers from the absence of titles and/or the failure to transfer existing titles, to take measures to make the issuing and transfer of titles compulsory.
Possible actions, in addition to the existing legislative proposals, may include:
- the clear condemnation of the practice of cancellation agreements as illegal by appropriate legislative measures;
- the setting of a time limit within which a transfer must be completed after the issuing of Title Deeds and;
- the imposition of penalties on developers who fail either to issue or to transfer Title Deeds for one reason or another.
Andreas D. Symeou LL.B, M.Sc (U.L.A.) is a property consultant and a Member of the Royal Institute of Chartered Surveyors (MRICS). He may be contacted at [email protected]