OVER the past few days, hundreds of people who have bought property in Cyprus without Title Deeds have been targeted by a number of organisations offering to submit applications to the authorities on their behalf for the issuance of their deeds. The cost of their ‘services’ ranges between €1,000 and €4,000 plus VAT.
One of these organisations is a well-known real-estate company. In its email to its current and former clients, the company says:
- The absence of Title Deed is dangerous, especially now that many developers are struggling financially due to the economic crisis.
- The issuing of a Title Deed adds significant value to a property, which can be mortgaged at any Bank if desired.
- A property with Title Deed also attracts many more buyers and enables a resale transaction to proceed in a far more straightforward manner.
- The most important factor however, is that Title Deed gives absolute and undisputed ownership of your property.
All of the points above are valid; buying a property without Title Deeds is indeed dangerous as many of this company’s clients now realise!
Regrettably however, it seems that this company may have failed to advise its clients of this danger when they first purchased their property.
Planning amnesty laws
The recently approved law requires the developer to move towards securing Title Deeds for his/her customers and to carry out all that is necessary to ensure that those Deeds are issued in a timely manner so that they can be transferred without delay.
The new planning laws state that if a property has been completed to specification and there are no planning irregularities, the project architect may file plans for a division so that the Title Deeds will be issued “very soon after without more red tape“.
However, if the property or development suffers from major planning irregularities, these must be corrected.
If the property or development suffers from minor planning irregularities, then the developer or the buyer (or any person with a valid interest in the property) can submit a form of intent to go through the “planning amnesty” process. This form of intent has to be submitted to the authorities by 8th October this year. (The necessary application forms will be made available in English so that buyers wishing to take matters into their own hands may do so).
Providing that any planning infringements fall within the scope of the amnesty provisions, the applicant will be able to apply for a ‘Certificate of Final Approval’; a necessary stage in the process of the issuing of Title Deeds.
Depending on the nature and extent of any infringements, a fine may be payable. For example, if a property has been overbuilt the applicant will be required to pay a penalty to legalise the infringement. Minor infringements that are not due to overbuilding may be corrected by plantings, landscaping and by other means.
However, if the planning infringement is major, the process will ultimately result in the issuance of a Title Deed containing a statement about the offending part of the property. Depending on the severity of a major infringement, this statement may prevent the sale of the property or will allow its sale providing that certain conditions are met.
(Note that in any event Property Transfer Fees will have to be paid to transfer title.)
Is it worth it?
The quoted service charge of €1,000 – €4,000 (plus VAT) is unrelated to the actual cost of securing Title Deeds. To secure their deeds buyers will also have to pay:
- Where appropriate, an element of the developer’s mortgage on the land. (E.g. If the developer owes €1 million on a development of 10 properties, each buyer could offer to pay €100,000 to obtain a mortgage release from the bank).
- Where appropriate, a charge to correct any planning irregularities imposed by the authorities dealing with the planning amnesty.
- In circumstances where the developer is unwilling or unable to provide a ‘tax clearance certificate’ to the Land Registry, buyers will only be able to obtain their Title Deeds if they pay the developer’s tax liabilities themselves.
- Property Transfer Fees to the Land Registry which are based on the market value of the property at its date of sale.
Buyers wishing to recover these costs (excluding Property Transfer Fees) may sue their developer. This will involve additional legal and court fees and there is no guarantee that the court will rule in their favour when their case is eventually heard.
Those who have purchased property and who have yet to receive its Title Deed need to write to the Competition and Consumer Protection Service. More details and suggested letter templates on the Cyprus Property Action Group website.