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Introduction to the Legal System in Cyprus

General Property Legislation

Specific Property Legislation

Approval by the Council of Ministers

Things to have in mind when applying for a permit to transfer a property

Acquiring the Title Deed

Other information you should have in mind when acquiring a property

Residence & Employment Permits

Cyprus is a very popular destination by European countries especially the Eastern European Block. The ideal & convenient geographical location of Cyprus can provide direct links to key European, Asian, Middle East & Africa countries for both business and pleasure. Its warm and stable climate conditions pertaining in the region, the hospitality and friendliness of the locals, the high standard of education provided, its safe & protective legal system, the very low crime level which makes it an ideal place to raise children, the high standard of legal, banking and accounting services provided, the excellent infrastructure, the continuing development of the island, the extensive use of English language combined with the accession of the island to the EU have attracted many retiree people, investors and private individuals to engage in employment and invest in the immovable property market of the island.

Buying a property in Cyprus can be a very satisfying, but simultaneously a difficult decision to make and it is important to receive proper legal advice, correct guidance and do a lot of research before making any decision. Make sure when purchasing property to enquire as to the reputation and reliability of the developer.

What are the Legal System & the Cyprus legislation regarding immovable property?

1. The legal system in Cyprus is based on the British model (common law), but in the field of Immovable Property, Cyprus legislation and the legal system is considered different from the U.K.
2. The protection of ownership is safeguarded by the provisions of the Constitution, the ultimate Law of Cyprus, which establishes the equality of all persons and the respect for human rights, including the right to ownership, without discriminations.
3. According to the Cyprus Law, Cypriots and foreigners can enjoy all rights relating to ownership of their property without any interference either from the State or individuals. Property in Cyprus is regulated in such a way as to protect the rights of the purchasers. The legislation is divided into 2 categories; General Legislation and Specific Legislation.

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The main laws are as follows:

• Cap. 6 and Rules regulates the court procedures in resolving disputes arising out of immovable property transaction

• The Constitution of Cyprus - Foreigners who own property in Cyprus can also enjoy the same rights pertaining to property which are available to the citizens of Cyprus and can be assured that their property is absolutely protected. The right of ownership of immovable property is considered as one of the fundamental human rights under the Constitution of Cyprus and as such it is absolutely protected.

• The Contract Law, Cap. 149 regulates all kinds of transactions, including transactions relating to immovable property.

• The Civil Procedure Law

• The Stamp Law, 19/63 as amended - See Taxation section.

• The Wills and Succession Law, Cap. 195, The Administration of Estates Law, Cap. 189, The Probates (Re-Sealing) Law, Cap. 192, The Estate Duty Law, 67/1962 as amended deal with the rights of persons as regards the disposition of their properties after death and the relevant procedures.

• The Trustees Law, Cap. 193. A Trust legal system enables individuals, flexibly and confidentially, to dispose their properties through a trustee that they trust.  It can be effective, if created by a trust deed or by will.

• The Movement of Capital Law 115/2003 and The Central Bank of Cyprus Law 2003 and 2007, 166/2003 and 34/2007. The Exchange Control Restriction Laws were abolished as a result of the accession of Cyprus to the EU enabling the free movement of capital. The movement of funds is effected without any restrictions between individuals living in Cyprus and individuals living in any EU Member State, or individuals residing in any State of the world not being an EU Member State.

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• The Immovable Property (Tenure, Registration and Valuation) Law, Cap.224
  
  
  • This law has replaced the Ottoman Land Law and was enacted in 1946. It is considered to be the most important law of immovable property in Cyprus. It deals with all matters concerning the tenure, registration, disposition and valuation of property, within the framework of the Land Office system (LOS) of Cyprus. This comprises all the works and means by which property is technically defined, drawn, legally recognised, secured and financially valued. The LOS of Cyprus is unique. The rights in land are defined and secured and all transactions relating to immovable property are safe and protected.

• The Sale of Land (Specific Performance) Law, Cap. 232

• When the purchaser cannot transfer the acquired property onto his/her name immediately, sometimes for a long period of time after full payment, e.g. an alien purchaser awaiting for the permit of the Council of Ministry.  S/he can secure the transfer by depositing the contract of sale from the signing of the contract, duly signed & properly stamped 2 months from the signing of the contract to the Land Registry Office.

• The deposit of a contract of sale at the department of Lands & Surveys creates an encumbrance of a great practical importance on the purchased property. This encumbrance prevents the vendor of the property from selling or transferring the property to a third party without the purchaser knowledge, for as long as the contract is valid and legally effective

• The purchaser may also obtain a judgement from the court ordering the registration of the property in his name, in the event the vendors refuses or fails to transfer the property within the time frame agreed in the contract. Generally, the purchaser is given the right to seek Specific Performance of his contract terms. Basically this means that the purchaser can force the vendor to specifically perform something which he agreed to do and which is confirmed he would do within the contract and he is not doing it.

• C. The Acquisition of Immovable Property (Aliens) Law, Cap. 109 

• Due to the increase in the acquisition of property in Cyprus, the government in an effort to avoid exploitation & to prevent excessive land alienation has introduced certain restriction regarding purchasing property in Cyprus.

• E.U. citizens who reside in Cyprus for a total period of 183 days per year or more are not affected by these restrictions formalities can enjoy freedom in the acquisition of immovable property in Cyprus the same way as the locals. This includes:
  
  
  • EU members living in Cyprus, after they receive residential permit from the local administration offices.
    
  • Companies established in accordance to the law of any EU country and have their establishment and main offices in Cyprus.
  • Under legal terms, an alien is defined as a non-Cyprus citizen whether resident or not, includes a company where half or more of its directors are aliens, a company incorporated abroad whether management and control is in Cyprusor not, or a trust in which an alien has an interest. According to section 23 of the Constitution, aliens E.U. citizens who are not residing in Cyprus wish to purchase property in Cyprus are subject to compulsory acquisition or imposition of legal restrictions/constraints on immovable property by the Government, which is regulated by the Compulsory Acquisition Law, No. 15/62 must follow certain formalities. No alien can acquire immovable property for residential or business purposes, without the prior permission of the Council of Ministers. This power has been assigned to the pertinent authorities of every district, as to speed up the procedure. All restrictions will be removed by MAY 2009
    
  • Acquisition refers to an outright purchase of property, transfer of title deed, long lease for periods of more than 33 years, the acquisition of shares in a company that owns property or the establishment of a trust for an alien regarding property connected to immovable property. The company is controlled by foreigners, for the benefit of a foreigner including tax benefits.

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The application to the pertinent authority requires information about the applicant’s personal family details (e.g. marital position, passport details, religion etc), way of acquisition (i.e. Freehold, leasehold, shares in company), details of present owner, terms way of payment bank statement/bank reference to confirm/proof the financial means/standing of the applicant, property particulars (e.g. copy of title deed, drawings government survey plans accompanied with the sales agreement as to confirm the details regarding the property which is being purchased.

As a general rule permission is granted to applicants provided they have no criminal record in their country or in Cyprus, their financial standing to be satisfactory (an income of CYP12.000 €20,500 per annum between a couple is considered satisfactory).

Rejection will only arise in the event of suspicion of involvement in terrorism, drug trafficking, smuggling of weapons etc. After the permission has been obtained and the property is registered in the name of the purchaser, there are no other restrictions for the aliens. The owner of the property can sell or dispose of the property as he pleases.

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Nevertheless the situation is different with an international business company. which may also acquire premises for their business and for the residence of their foreign employees provided they maintain a fully fledged office. The relevant authorities may grant approval for the acquisition by an alien for a larger area of land, if the land is to be used for tourist development (e.g. Hotel or Hotel Complex), especially if the intended project is in an area where the Government wishes to promote tourism. A similar stand is taken for certain industrial sectors. The acquisition of plot or land is unlimited for EU member states whether residing in Cyprus or not.

The application to the pertinent authority requires information about the applicant’s personal & family details (e.g. marital position, passport details, religion etc), way of acquisition (i.e. Freehold, leasehold, shares in company), details of present owner, terms & way of payment, bank statement/bank reference to confirm/proof the financial means/standing of the applicant, property particulars (e.g. copy of title deed, drawings & government survey plans) accompanied with the sales agreement as to confirm the details regarding the property which is being purchased.

As a general rule permission is granted to applicants provided they have no criminal record in their country or in >Cyprus, their financial standing to be satisfactory (an income of CYP12.000 €20,500 per annum between a couple is considered satisfactory).

Rejection will only arise in the event of suspicion of involvement in terrorism, drug trafficking, smuggling of weapons etc. After the permission has been obtained and the property is registered in the name of the purchaser, there are no other restrictions for the aliens. The owner of the property can sell or dispose of the property as he pleases.

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When issued, the title deed will be registered in the name of the purchaser, and will be recorded in the Government archives/book. The Government archives/books are confidential & will never be published nor made available under any circumstances.

At any time after the purchase, the purchaser may sell or dispose of the property at will. A contract is not necessarily needed to that effect. In the event you do decide to use a contract make sure you use the following in the sales agreement:

Important Terms to include in a Sales Agreement

1. Must specify all parties – All registered vendors of the property and purchasers.

2. Possession and ownership transferring. The contract must include when the vendor will pass on the possession of the property to the purchaser and guarantee he is the registered owner of the property and in a position to transfer the property, free of any encumbrances.

3. Term regarding the Sales Price and Method of payment. The payment of the price is the primary obligation of the purchaser. To avoid misunderstandings the sale price should clearly mention whether the VAT is included or not. If payment is intended to be effected by instalments then the exact method of payment must be clearly stated.

4. If the property in question is a new one / under construction make sure the vendor guarantees to obtain the Town Planning and Building Permits Certificates. The contract should include penalty on the vendor for any defects, at least 1 year after the delivery of the house/flat.

5. Due to the fact that under construction properties / brand new properties don’t have title deed until the whole development is finished, it is recommended to stamp the sale contract and register it with the Land Registry Office for Special Performance purposes.

6. To include provisions in favour of a foreigner, in the event the pertinent authority rejects the foreigner’s request for a permit as to secure a refund of any money paid or any other remedy.

When purchasing a property “off plan” / under construction in Cyprus, title deeds are not issued automatically as soon as the property has been completed and delivered to the purchaser. In other European countries, the title deed for a house or a flat is issued very soon after the completion of the purchase of the property. In Cyprus, the developer / constructor has to apply to the Land Registry office to issue the deeds to the purchaser. This procedure will take place after the completion of the house/building/project.

On average, deeds for a project will be issued 3 years after the completion of a project.

That is why it is of the purchaser’s best interest to lodge stamped sales agreements at the Land Registry Office for specific performance purposes, in order to safeguard their rights until the title deeds are issued.

It is possible to sell/buy a property without a separate title deed. Any purchaser can buy from a vendor who has had his contract lodged at the Land Registry Office, & has no title deed. To complete such transaction it will be necessary for the vendor to withdrawal the contract from the Land Registry Office and the original vendor to sign a cancellation agreement as to cancel the 1^st contract and engage into a new contract with the new purchaser. The new purchaser can then lodge the new contract with the land registry Office.

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• Banks will lend between 60% and 80% of the value of the property depending on each case with a finance period up to 35 years depending on your age.
• Be careful when purchasing any kind of property in the North side, as you may find yourself into serious litigations and may even risk losing the property
• Unlike other countries like UK, in Cyprus most of the properties are freehold. Owning an apartment makes you simultaneously co owner and co user of the common parts such as the land, corridor, elevator etc. with other people. 
• In Cyprus we have what is called fractionalisation which means multiple owners of the same property own a fraction of the whole property.
• If you buy a property now and transfer it in a few years, you will pay transfer fees based on the purchased price declared on the contract at the time you purchased the property
• There is nothing to stop a potential purchaser dealing directly with a vendor, but it is recommended to use a licensed agent or property consultant for a few reasons such as:

a)    The agent will negotiate the best prices for you. What they say about agents increasing prices is not truth. It is the illegal agents that increase prices & simultaneously harm the purchaser’s pockets.

b)     The agent knows the laws, the in and the outs & can help you with any questions you may have.

c)     The agent will conduct a search at the LRO before entering into a contract to make sure that the property to be purchased is free from any encumbrances, charges or burdens.

d)    The agent will check whether there is a title deed for the property to be purchased. In the case of a house without a title deed, the agent will check whether there is a certificate of worthiness/approval (approved drawings of the house from the Town Planning Department that the house was build according to the plans & was approved by the planning department.

e)      The LOS is somewhat bureaucratic and best tackled by a professional representative.

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The requirements for visa vary on the nationality of each alien. EU citizens pass the so-called face and passport control without receiving an entry stamp at their passport. Other nationals are required to secure their entry visa prior to arrival in Cyprus> at the Embassy of Cyprus at their country. All other nationals receive the official stamp that witnesses their arrival. The entry visa is usually given from 1 to 4 weeks.

Residence Permit

A temporary residence permit in Cyprus is required if you are staying longer than 90 days and must be applied for at least one month in advance to the Civil Registration & Migration Department.

A. Temporary Residence Permit

An alien may request for the issue of a temporary residence permit for the purpose of holidays, tour around the island and for the search of a possible temporary or permanent settlement in Cyprus. To receive a residence permit in Cyprus an alien resident must fulfil one of the following requirements:

• Property in Cyprus. The granting of this permit is easily obtained but it requires the existence of a bank account in Cyprus and a sales/rent agreement of the property purchased. Temporary residence status can be from 1 to 4 years.
  
  
• Disposition of secured annual income. In some cases the Immigration Officer may secure a permit for an alien if he has stable and secured income from abroad such as pension, dividends from investments, interest from deposits, etc.
• Alien students/pupils. Pupil permits for aliens are granted for attending registered secondary and primary educational institutes. In these cases the applications are submitted by the educational Establishment the aliens will attend. Such a permit is subject to be issued for a specific educational institute and a change of the institute means an abolishment of the existing permit and an obligation to obtain a new one.
• Any person that permanently or temporarily stays in Cyprus or has a work permit may invite close family members to stay together with him/her and apply for the temporary residence permit for them. The document that must be presented to the District Aliens and Immigration Office are the work and/or residence permit and a bank letter of guarantee. An immigration officer may require additional information in each separate case.

B. Permanent Residence Permit.

To settle in Cyprus permanently one may apply to the Chief Immigration Officer by submitting an application form M.67. In addition the applicant must establish evidence of a secured annual income of not less than CYP5 000 / €8543 for a couple. In accordance with the Regulation 5 of the Alien and Immigration Regulations of 1972 an alien must belong to one of the following Categories:

Category A: Persons who intend to work as self employed in agriculture, cattle breeding, bird breeding or fish culture in Cyprus, provided they have in possession adequate land or a permit to acquire same, they have at their disposal a capital of CY£250,000 / €427,150 and such an employment should not negatively affect the general economy of Cyprus.

Category B: Persons who intend to work as self employed in mining enterprises in the Republic, provided that they have in their possession a relative permit, they have fully and freely at their disposal capital of CY£200,000 / €341,720 and such an employment should not negatively affect the general economy of the Republic.

Category C: Persons who intend to work as self employed in a trade or profession in the Republic, provided that they have in their possession a relative permit, they have fully and freely at their disposal capital of CY£150,000 / €256,290 and such an employment should not affect negatively the general economy of the Republic.

Category D: Persons who intend to work as self employed in a profession or science in Cyprus, provided that they have academic or professional qualifications, for which there is demand in Cyprus. Possession of adequate funds is also necessary.

Category E: Persons who have been offered permanent employment in the Republic, which will not create undue local competition.

Category F: Persons who possess and have fully and freely at their disposal a secured annual income, high enough to give them a decent living in Cyprus, without having to engage in any business, trade or profession e.g. pensioners. This requires you to prove you are able to support yourself and your dependants financially from external sources and are not allowed working in Cyprus either full or part time.

If the permanent residence permit is granted an alien receives an official stamp on his/her passport and is not obliged to renew the residence permit annually.

Cyprus has recently implemented The Directive of the European Union 2003/109/EC, which says that migrants who live in Cyprus for five years, legally and continuously, are entitled for permanent residence permit. The Directive was published on 23 January 2004 and since 23 January 2006 is in force in Cyprus.

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