Hi Svetlana and hincyprus
It is interesting to read this thread with invaluable advice.
Sorry to be late to come across this forum.
I bought 2000 sq meters (half an acre) of an immovable land (agriculture) a few years ago from an estate agent. The land is part of a big plot of several acres. My solicitor has deposited The Sale Contract with Land Registry Office. As the land I bought is part of a big plot with no seperate title, I am not a registered owner (the developer is ), but a legal owner of the land. The land can only be registered if I build a house which I have no intention at the moment.
Please give your valuable advice what should I do to get it a seperate title so that I can be registered owner. Is it possible to sell off this non titled lands.? How to sell without selling it back to the developer? In other word, what is the best way to sell it? What is the capital gain tax in Cyprus.
Thank you.
Regards
Kuchan
Buying a house
Immovable land
by kuchan » Sat Dec 03, 2005 5:57 pm
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by Svetlana » Mon Dec 05, 2005 8:53 am
Hi Kuchan
Firtsly, you must seek a solicitor's advice.
My opinion is that you can only obtain separate Title by getting the Owner (current Title Deed holder) to apply to the Land Department to sub-divide the plot. He may want to charge you a great deal of money for doing this.
You asked if it were possible to sell off the land without the Title Deeds, yes but only with the agreement of the Title Deed holder (and again he might want to charge you a large fee).
To buy land without the Title Deeds can be very problematical.
Capital Gains Tax in Cyprus is 20% on the difference between the buying and selling price. There is a one off £10,000 personal allowance, against the tax.
My advice: speak to a lawyer, then call the Title Deed holder and tell him/her what you intend to do.
Lana
Firtsly, you must seek a solicitor's advice.
My opinion is that you can only obtain separate Title by getting the Owner (current Title Deed holder) to apply to the Land Department to sub-divide the plot. He may want to charge you a great deal of money for doing this.
You asked if it were possible to sell off the land without the Title Deeds, yes but only with the agreement of the Title Deed holder (and again he might want to charge you a large fee).
To buy land without the Title Deeds can be very problematical.
Capital Gains Tax in Cyprus is 20% on the difference between the buying and selling price. There is a one off £10,000 personal allowance, against the tax.
My advice: speak to a lawyer, then call the Title Deed holder and tell him/her what you intend to do.
Lana
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by kuchan » Tue Dec 06, 2005 11:04 pm
Lana
Many thanks for your advice.
My solicitor advice is that unless I build a house on the land, the Land Registry Office would not register me a title deed. The developer has been waiting for the plot of agriculture land to be approved for building land in the last five years so that he could sub divide the plot to build houses.
As I am the legal owner, not the registered owner, am I protected from the receiver if the Developer is bankrupt?
I bought that land initially for my retirement in the future but now has change my mind.
Your advice is of great help.
Regards
Kuchan
Many thanks for your advice.
My solicitor advice is that unless I build a house on the land, the Land Registry Office would not register me a title deed. The developer has been waiting for the plot of agriculture land to be approved for building land in the last five years so that he could sub divide the plot to build houses.
As I am the legal owner, not the registered owner, am I protected from the receiver if the Developer is bankrupt?
I bought that land initially for my retirement in the future but now has change my mind.
Your advice is of great help.
Regards
Kuchan
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by Svetlana » Wed Dec 07, 2005 3:37 pm
Hi Kuchan
Ah! it is zoned as agricultural land, in which case only one property can be built on it and it cannot be sub-divided as building plots.
You are only protected against the Title Deed owner going bancrupt, if the Purchase Contract was lodged with the Land Registry within 60 days of being signed, in an action known as 'Specific Peformance', otherwise you have very little protection.
Lana
Ah! it is zoned as agricultural land, in which case only one property can be built on it and it cannot be sub-divided as building plots.
You are only protected against the Title Deed owner going bancrupt, if the Purchase Contract was lodged with the Land Registry within 60 days of being signed, in an action known as 'Specific Peformance', otherwise you have very little protection.
Lana
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by Leonidas » Sun Dec 18, 2005 11:07 am
I guess not much changed in Cyprus since I left 25 years ago.
It is still not who you are but who you know.
That said, there always going to be problems in construction unless you have a firm an legal agreement with drawings.
If you don't know what you are doing hire a reputable expert to supervise your project.
It is the same everywhere in this world we live in.
Leonidas
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by nhowarth » Fri Jan 06, 2006 4:27 pm
Hi,
I've only just joined the Cyprus Forum, so my apologies for not contributing to this discussion before - and I hope I'm not treading on anyones toes.
Firstly, regarding 'Specific Performance'.
Depositing your contract of sale at the District Lands' office creates what is known as an 'encumbrance' on the Title. This 'encumbrance' effectively prevents the registered owner of the property from selling it to someone else or using the property as collateral to raise money. Also, if the owner decides they no longer wish to sell you the property and withdraw from the contract, you can pursue judgement through the courts to have the property registered in your name.
However, the encumbrance does not prevent the registered owner from extending, rescheduling, refinancing any loan/mortgage against the property that pre-dated your deposit of contract. Furthermore, if the registered owner were to default on any pre-existing loan then the creditor(s) could pursue judgement through the courts. As the court deals with such claims in chronological order, you could, potentially end up with nothing.
So when buying property it is essential that you instruct your lawyer to carry out a 'Title Search' to ensure that Title to the property you're thinking of buying is 'clean'; i.e there are no encumbrances (or prohibitions) already lodged against its Title.
Secondly, regarding the developer going bankrupt.
Even if the Title is 'clean' when you deposit your contract of sale, you can still run into other problems.
When someone goes bankrupt, the creditor(s) can apply to a court and, if successful, the court’s judgement can be registered with the District Lands’ Office in the form of a 'special' encumbrance known as a memo. (Effectively, the court orders a freeze on all the bankrupt persons assets, including any property that's registered in their name).
It is not the responsibility of the District Lands’ Office to decide who has prior claim to the property in question, but the court. For example, it could be that the sale of property resulted from the collusion on the part of its owner and you, the buyer. In other words the vendor, knowing he was about to default on a creditor and be taken to court, may have colluded with you to effect a sale.
Should you find yourself in this unfortunate situation, a sensible approach is to ask your solicitor to speak with the creditor(s) to see if they will remove the encumbrance.
If they refuse, your only course of action is to seek judgement on the matter through the courts.
Kuchan
I am extremely surprised that you lawyer didn't advise you of the potential problems of (a) buying land without a Title Deed (b) of buying agricultural land (c) Problems of getting Planning Permision and a Building Permissions permit. Was the lawyer you used introduced or recommended by the developer?
Unfortunately, you are not the legal owner - the person in whose name the land is registered is the legal owner. I think the legal term is 'beneficial owner'.
I see that you've now changed your mind (presumably you wish to sell the land). Unfortunately, as you don't legally own it, you can't sell it.
If you manage to find a buyer, what you'll have to do is cancel your contract of sale with the legal owner (the property developer) which will (a) enable the encumbrance placed on its Title to be removed and (b) allow the legal owner to enter into a contract of sale with your buyer.
But of course, you cannot do this without the agreement of the legal owner. Unless you lawyer has 'capped' the contract cancellation fee in your contract of sale, the legal owner will probably charge you somewhere in the region of 2% of the sale price to cancel the contract you have with him.
And I'm afraid it doesn't stop there. As the 'beneficial owner' you are liable to pay Immovable Property Tax on the land. As you might appreciate, some developers are the legal owners of property whose value runs into many millions of pounds. What some of them do is apportion their Immovable Property Tax bill between the beneficial owners - as a result, you may be in for a bit of a shock! But it's essential that you demand copies of invoices and receipts from the owner so that you can reclaim some or all of the overpaid tax from the Revenue.
As Svetlana has already said "To buy land without the Title Deeds can be very problematical" (This is a bit like Noah saying "I think we're going to get a shower of rain").
Finally, for your own best interests, please, please get rid of the idiot of a lawyer who's been advising you and get someone who is (a) independent and (b) knows what they're doing!
Regards,
I've only just joined the Cyprus Forum, so my apologies for not contributing to this discussion before - and I hope I'm not treading on anyones toes.
Firstly, regarding 'Specific Performance'.
Depositing your contract of sale at the District Lands' office creates what is known as an 'encumbrance' on the Title. This 'encumbrance' effectively prevents the registered owner of the property from selling it to someone else or using the property as collateral to raise money. Also, if the owner decides they no longer wish to sell you the property and withdraw from the contract, you can pursue judgement through the courts to have the property registered in your name.
However, the encumbrance does not prevent the registered owner from extending, rescheduling, refinancing any loan/mortgage against the property that pre-dated your deposit of contract. Furthermore, if the registered owner were to default on any pre-existing loan then the creditor(s) could pursue judgement through the courts. As the court deals with such claims in chronological order, you could, potentially end up with nothing.
So when buying property it is essential that you instruct your lawyer to carry out a 'Title Search' to ensure that Title to the property you're thinking of buying is 'clean'; i.e there are no encumbrances (or prohibitions) already lodged against its Title.
Secondly, regarding the developer going bankrupt.
Even if the Title is 'clean' when you deposit your contract of sale, you can still run into other problems.
When someone goes bankrupt, the creditor(s) can apply to a court and, if successful, the court’s judgement can be registered with the District Lands’ Office in the form of a 'special' encumbrance known as a memo. (Effectively, the court orders a freeze on all the bankrupt persons assets, including any property that's registered in their name).
It is not the responsibility of the District Lands’ Office to decide who has prior claim to the property in question, but the court. For example, it could be that the sale of property resulted from the collusion on the part of its owner and you, the buyer. In other words the vendor, knowing he was about to default on a creditor and be taken to court, may have colluded with you to effect a sale.
Should you find yourself in this unfortunate situation, a sensible approach is to ask your solicitor to speak with the creditor(s) to see if they will remove the encumbrance.
If they refuse, your only course of action is to seek judgement on the matter through the courts.
Kuchan
I am extremely surprised that you lawyer didn't advise you of the potential problems of (a) buying land without a Title Deed (b) of buying agricultural land (c) Problems of getting Planning Permision and a Building Permissions permit. Was the lawyer you used introduced or recommended by the developer?
Unfortunately, you are not the legal owner - the person in whose name the land is registered is the legal owner. I think the legal term is 'beneficial owner'.
I see that you've now changed your mind (presumably you wish to sell the land). Unfortunately, as you don't legally own it, you can't sell it.
If you manage to find a buyer, what you'll have to do is cancel your contract of sale with the legal owner (the property developer) which will (a) enable the encumbrance placed on its Title to be removed and (b) allow the legal owner to enter into a contract of sale with your buyer.
But of course, you cannot do this without the agreement of the legal owner. Unless you lawyer has 'capped' the contract cancellation fee in your contract of sale, the legal owner will probably charge you somewhere in the region of 2% of the sale price to cancel the contract you have with him.
And I'm afraid it doesn't stop there. As the 'beneficial owner' you are liable to pay Immovable Property Tax on the land. As you might appreciate, some developers are the legal owners of property whose value runs into many millions of pounds. What some of them do is apportion their Immovable Property Tax bill between the beneficial owners - as a result, you may be in for a bit of a shock! But it's essential that you demand copies of invoices and receipts from the owner so that you can reclaim some or all of the overpaid tax from the Revenue.
As Svetlana has already said "To buy land without the Title Deeds can be very problematical" (This is a bit like Noah saying "I think we're going to get a shower of rain").
Finally, for your own best interests, please, please get rid of the idiot of a lawyer who's been advising you and get someone who is (a) independent and (b) knows what they're doing!
Regards,
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by nhowarth » Fri Jan 06, 2006 6:22 pm
Hi hincyprus
To answer the question you raised on Sat Jul 23, 2005 12:48 pm
"How then do you explain a development of nine properties, all sold and occupied, where the developer has informed all the owners that he has just taken out a bank loan against the development to fund his next project?"
(Assuming the contracts of sale have indeed been deposited for ‘Specific Performance’)
The developer most probably took out a mortgage on the land before the contracts of sale were deposited. He can then, quite legally, extend the amount of loan(s), reschedule payments – basically do whatever he wants with the agreement of the lenders.
But what he cannot do, as Svetlana has pointed out, is take out a new loan.
(I know of someone in Pissouri who has this problem – her contract of sale was deposited over 20 years ago and she’s still waiting for the developer to pay off the mortgage. But of course, there’s absolutely no incentive for him to do so).
A further point to note on ‘Specific Performance’ is that the encumbrance it creates expires six months after the date of the contract or six months from the last date of transfer specified therein. So if you don’t act quickly and have the property registered in your name within this time window, the owner can sell it to someone else, use it as collateral against a loan, etc.
Regards,
To answer the question you raised on Sat Jul 23, 2005 12:48 pm
"How then do you explain a development of nine properties, all sold and occupied, where the developer has informed all the owners that he has just taken out a bank loan against the development to fund his next project?"
(Assuming the contracts of sale have indeed been deposited for ‘Specific Performance’)
The developer most probably took out a mortgage on the land before the contracts of sale were deposited. He can then, quite legally, extend the amount of loan(s), reschedule payments – basically do whatever he wants with the agreement of the lenders.
But what he cannot do, as Svetlana has pointed out, is take out a new loan.
(I know of someone in Pissouri who has this problem – her contract of sale was deposited over 20 years ago and she’s still waiting for the developer to pay off the mortgage. But of course, there’s absolutely no incentive for him to do so).
A further point to note on ‘Specific Performance’ is that the encumbrance it creates expires six months after the date of the contract or six months from the last date of transfer specified therein. So if you don’t act quickly and have the property registered in your name within this time window, the owner can sell it to someone else, use it as collateral against a loan, etc.
Regards,
- nhowarth
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by alex669 » Sat Jan 07, 2006 12:51 pm
I'm wondering if anyone have answers to the following questions:
1. Is there a way to deduct housing loan interest payments from the taxable income amount?
2. I heard that government returns a VAT when someone buys a first house/apartment. Is this true?
1. Is there a way to deduct housing loan interest payments from the taxable income amount?
2. I heard that government returns a VAT when someone buys a first house/apartment. Is this true?
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by nhowarth » Sat Jan 07, 2006 2:53 pm
Hi Alex,
> Is there a way to deduct housing loan interest payments from the taxable income amount?
Possibly - Interest on housing loans can, in some cases, be allowable against income tax. The best person to speak to is Maria Zavrou at the Income Tax office in Limassol - her number is 25803784
I heard that government returns a VAT when someone buys a first house/apartment. Is this true?
A bill was passed on Wednesday 9th November that provides for the return of some of the VAT for dwellings not exceeding 250 sq.m so you effectively pay only 5% rather than 15%. (Oops, not quite true, you pay the full 15% and claim a refund from the Govt). It's effect is backdated to 1st May 2004, when VAT was imposed on properties. I'm afraid I don't have any more details as yet; but I have a feeling in my water that it's only available to Cypriot nationals.
Regards,
> Is there a way to deduct housing loan interest payments from the taxable income amount?
Possibly - Interest on housing loans can, in some cases, be allowable against income tax. The best person to speak to is Maria Zavrou at the Income Tax office in Limassol - her number is 25803784
I heard that government returns a VAT when someone buys a first house/apartment. Is this true?
A bill was passed on Wednesday 9th November that provides for the return of some of the VAT for dwellings not exceeding 250 sq.m so you effectively pay only 5% rather than 15%. (Oops, not quite true, you pay the full 15% and claim a refund from the Govt). It's effect is backdated to 1st May 2004, when VAT was imposed on properties. I'm afraid I don't have any more details as yet; but I have a feeling in my water that it's only available to Cypriot nationals.
Regards,
- nhowarth
- Contributor
- Posts: 400
- Joined: Fri Jan 06, 2006 3:08 pm
- Location: Erimi, Limassol District, Cyprus
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