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British High Commission Advice on Cyprus Property Purchases

The British High Commission has released new advice for British overseas property investors looking to purchase real estate in Cyprus.

The new advice from the UK Foreign & Commonwealth Office is particularly related to outstanding mortgages that could be found on Cyprus properties.

Advice on Mortgage Liability

It is common practice for developers to take out mortgages on land or property. If you sign a contract with a developer and there is already a mortgage, loan or claim on the property, then you are likely to become liable for that mortgage should the builder, developer or landowner declare bankruptcy.

You should ask your lawyer to check for mortgages placed on the land through a Land Search Certificate which is obtained from the Land Registry. It should be noted that in order to obtain a Land Search Certificate one requires a relevant authorisation from the Property’s owner. If you are made aware of a mortgage before signing a contract it is unlikely that you will obtain the deeds in your name until the mortgage is paid off.

Lawyers are not required to check for mortgages automatically, although good lawyers should do this as a matter of course. In 2011 the Republic of Cyprus Government introduced a Specific Performance Law to give a contract of sale precedence over any pre-existing mortgage, however we still strongly recommend that you check no mortgages have been placed on the land prior to purchase to ensure you do not run into potential difficulties at a later date.

Other issues most frequently raised by British nationals include:

Lawyers acting for both vendors or builders therefore not independent.

Building works taking place without the correct planning permission or building permit (eg electricity or water).

Fluctuations in currency and interest rates affecting mortgages.

Payment plans or fees not being included in the initial contract.

Difficulty in obtaining certificates of final completion (deeds cannot be issued without this).

Difficulty in obtaining title deeds.

Difficulty in obtaining redress after problems are identified.

With all property purchases, we strongly recommend that you seek your own independent legal advice. If you have purchased a property or land and are encountering difficulties, you should seek qualified independent legal advice on your rights and methods of redress.

The Foreign and Commonwealth Office and the British High Commission are not able to offer legal advice or become involved with disputes between private parties. However, we direct British nationals to organisations who may be able to help, and we can raise systemic issues, problems which affect a number of customers, with local authorities.

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