Whether you are buying property to fulfil the criteria for citizenship by investment or for permanent residency, it is important to be aware of potential pitfalls you might encounter and also of all the extra costs involved. Hiring an experienced property lawyer will protect you from making the mistakes than many have done before you. Acquiring a property is a major acquisition and care and attention must be paid to the finer details of the transaction.
The first thing that needs to be done is to make sure that the property is free and clear. It could be the property of a divorced couple or disputed in an inheritance case, or there might be a mortgage attached to the house in which case the house could belong to the bank. A good property lawyer will conduct all the necessary investigations to ensure that the property you are about to buy is fully available.
Next you would have to negotiate the commission that you will be paying the agent you are buying the property from. In some cases there are ‘hidden’ commissions that you might not be aware of, so be very careful what you sign. Over and above the price of the house and the commission, consideration must be given to how much VAT is payable, transfer fees, stamp duties, immovable property taxes and off course legal fees.
Regarding transfer fees, these are payable when the property is registered in your name at the Lands registry office. The fee will be calculated on the value of the property and whether it is purchased in more than one name. If the property is a joint purchase and in two names the value will be divided between the two and both parties will end up saving on these fees as the calculation will be worked out on 50% of the value of the property. Transfer of property to a foreigner will require the permission of the Council of Ministers, with the exception of EU citizens who are living in Cyprus permanently.
If you are buying a home in a gated property which has a number of properties, be aware that the Developer might have mortgaged the whole property in order to get a loan from the bank for the construction. In this case, if you purchase a home without your lawyer doing a due diligence search on the property, you could be in big trouble should the developer go bankrupt. Unfortunately this happens, not only in Cyprus but around the world. It is up to the buyer to make sure they do not fall into this sort of trap. You basically need to be sure that once you have paid the full amount for your property, you will get your title deed, free and clear.
If you are asked to pay a deposit of any kind to secure the property of your dreams, make sure that it is clearly stated in a written contract that this amount will be deducted from the purchase price and also find out, in the event the deal falls through what you would be entitled to get back. In actual fact make sure that everything you have discussed with the seller or developer is put in writing to avoid disputes at a later stage. Saying and doing are two different things, make sure that you sign a binding contract that clearly shows everything that has been agreed on.
Be aware that a Contract of Sale must be stamped and registered at the Land Registry office within the timeframe specified by law, failing to do this could result in the loss of certain legal rights.
If you are buying a luxury villa in Cyprus and will not be living in it throughout the year, you might want to consider getting a property maintenance company to take care of the property when you are not in the country. Here again, find a reputable company and make sure that all your requirements are written down in a contract that is binding. You must also make sure that you have fully comprehensive insurance for your home and the contents.
Something else worth considering when buying a home in Cyprus is your Will. Cyprus has specific laws regarding the estate of a deceased person, a certain percentage goes to the spouse and the rest is divided between the children. If this is not what you want, make sure that you draw up a Will with a lawyer to make sure that in the unfortunate event of something happening to you, your family will be protected the way you want them to be.