IT IS a fact that it takes a long time to secure a title deed for new property and this creates serious problems regarding ownership, finance, re-sale and other matters.
At this point of time there is a serious debate taking place in the House of Representatives on the subject, but we have not detected any solution in the horizon.
Numerous permits (approximately eight permits in total) are required after the building is completed.
And there are long delays until authorities examine and issue these permits.
This means the average period for the title issue is four to six years (and that is provided that the building has no major or even minor problems) after the building’s completion.
Surely this is not a satisfactory situation and the present delays have been evidenced by the demonstration that has taken place outside the Town Planning Office in Paphos (althogh the problem is not isolated to Paphos, Paphos is the worst region).
The authorities claim that over the last few years it had to process 14,000 applications per annum, as opposed to the 8,000 applications prior to the recent property boom.
For these reasons we suggest buyers take some “security” measures in order to protect their interests when buying a property as an interim measure until the titles are issued:
- Deposit your contract with the local Lands Registry Office. The sales contract must be duly signed within two months from the date of signing of the agreement. This deposit acts as a charge on the property and it will protect you for any subsequent sale, mortgages etc that might follow the deposit date.
- Get a release from the mortgagee (if any). The release to be secured by the seller and it should stipulate that once the title deeds are issued, the mortgage holder will have no objection in releasing the title for transfer.
- If you require a bank guarantee you must bear in mind that you will have to pay 1.8% on the amount of the guarantee, p.a., a quite high charge.
- Get a corporate guarantee from the developer/owner securing the free transfer of the property.
- Carry out your own search through your advocate regarding the seller’s/developer’s financial standing and check his “name” in the local market. There is a lot to be said in buying from the more “known” developers, as opposed to the small scale and financially weak developers, with no track record (even through their prices might be slightly lower than otherwise).
- Set a date in the sales contract by which the developer is bound to secure a title.
- Make a provision in the sales contract that the developer must comply with a request for a resale with a fixed charge (maximum £1,500) so that you can cancel your sales agreement by selling it to another buyer. The developer/original buyer, is to enter into a cancellation agreement and then the new buyer to enter into a new sales contract with the developer. In this case however the developer may ask the original buyer to cover his tax costs or for the original buyer to provide him with a tax release.
Surely the above measures are not a substitute to a title, but at least one should take such appropriate steps to protect himself during the period of waiting.
By Antonis Loizou
Antonis Loizou & Associates Ltd.
Property Valuers & Consultants