For decades, the Cyprus property market has been plagued by buyers who purchase properties without title deeds. To protect such buyers, the Cyprus Parliament passed several laws aimed at regulating these issues in 2011, 2015 and 2023. However, a recent court ruling that some provisions were unconstitutional has complicated the situation.
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Problem with title documents
A title deed is an official legal document that proves ownership of a property. It contains information about the owner of the property, as well as mortgages, court orders, long-term leases (more than 15 years) and other obligations. In Cyprus, it was possible to purchase a property without title deeds, which often happened when the seller mortgaged the property and could not transfer the rights to it to the buyer. Even after paying in full for the transaction, buyers had no guarantee that their money would be used to pay off the mortgage. As a result, such buyers became known as “blocked” or “trapped” buyers, as they were unable to formally register the ownership.
Legislative measures
In an attempt to address this issue, Parliament has passed several laws. In 2011, the Real Estate Sale Act was introduced, providing for a procedure for the enforcement of obligations by the seller. In 2015, the Real Estate Transfer and Mortgage Act was amended, and in 2023, changes were made to protect buyers from the risks associated with the absence of title deeds.
New procedure 2023
A new law passed at the end of 2023 established a procedure to protect buyers. According to the changes, the seller is required to include in the contract a certificate from the Land Department confirming the existence of all encumbrances on the property. This certificate must be issued no earlier than five days before signing the contract.
Three types of procedures were also established:
- A procedure : the buyer can pay off 95% of the mortgage and the bank will remove the encumbrance.
- B procedure : after 95% of the mortgage has been paid, the buyer receives confirmation from the bank that the mortgage has been lifted.
- C procedure : allows the buyer to file a sales contract without a Type A application.
The new procedure applies to contracts concluded from 12 December 2023. The 2011 law still applies to earlier contracts.
Constitutional issues
However, in 2024, the Court of Appeal ruled that the Land Board’s power to remove mortgages violated the constitutional rights of creditors to property, protected by Article 23 of the Constitution. It also contravened the freedom of contract enshrined in Article 26 of the Constitution. As a result, all applications for removal of mortgages were suspended, and the government is working on a new solution to address the current situation.
The Cyprus government has repeatedly tried to solve the problem of “blocked” property buyers, but a recent court decision has called the current procedure into question. To protect their rights, buyers are advised not to enter into transactions without obtaining title deeds and always consult a lawyer before purchasing a property.
