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Commonly Owned Buildings

Nigel Howarth
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If you are thinking of buying an apartment in Cyprus or a property in some other form of complex, it may include areas & facilities that you share with other buyers.

A building consisting of at least five self-contained units is considered in law as being commonly owned. Such buildings may include:

  • Apartment blocks.
  • Terrace/town houses.
  • Maisonettes.
  • Building complexes.

Buildings consisting of two to four units may also be registered as commonly owned on application to the District Lands’ Office by a majority of the owners of the units.

If you have property in such a development, you are required by law to contribute to the insurance, maintenance and repair of the commonly owned parts of the building; in essence those parts that you share with the other owners. These may include entrance halls, stairways, exterior walls, swimming pool, tennis courts, etc. (whether you make use of them or not).

This contribution is based on the size of the property in relation to others in the complex. E.g. A person with a 3-bed apartment of 160m2 will pay twice as much as a person who has a 1-bed apartment of 80m2 – because their apartment is twice the size.

Administrative committees

Commonly owned buildings in Cyprus are required to have an Administrative Committee that regulates and manages relevant affairs. The Committee must insure and always keep insured the commonly owned building against fire, lightning, and earthquake for a sum corresponding to its replacement value.

Administrative Committees are often set up by the developer or an associated company to which Cyprus property buyers pay a proportionate annual fee to cover the costs of insurance, maintenance and repairs of the commonly owned parts of the building.

The performance of these committees varies greatly; some have service level agreements and provide an excellent service, while others do not. Speak with the buyers of properties in the complex to get their views on how well the committee performs its duties and whether it provides a value for money service.

Where the developer has set up a committee, the regulations governing its operation are registered with Cyprus’ Land Registry; these apply to everyone who buys property in the development. You need to make yourself aware of these and how they affect you before signing any Sale Agreement.

If the developer hasn’t set up a committee, the law implies that a set of standard regulations is used. Your lawyer should be able to obtain a copy and advise you of your obligations under them.

Committees operated by the property buyers

In some cases, developers do not set up an Administrative Committee and it is left to buyers to sort things out.

Organising matters & collecting the annual management fees can become quite a headache for the property buyers, particularly if the properties have been bought as holiday lets and the buyers are not resident in Cyprus.But help is at hand:

If an owner refuses to pay the management fees, the Committee can lodge a claim against the offender’s property, in the form of a ‘memo’ for the debt. Although this may not result in the immediate payment of the debt, the owner will have to clear all such debts before they can sell the property.

Cyprus Home Prices Slightly Up in February 2007

Nigel Howarth
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In February, home selling prices in Cyprus recorded a marginal increase of 0.3% over the previous month.

The BuySell Home Price Index reached 120.14, bringing the average home price to £ 93,598.

The company started to produce its property price index in 2004. It shows the movement of prices at which residential properties in Cyprus are sold and is based on an average of around 400 to 500 home sales/month.

When the index started in January 2004, the average residential property price was CYP 77,910. By the end of February 2007, it had reached CYP 93,598 – an increase of 20.14% over the 38 months since its introduction. This equates to an approximate annual growth of 6.36%.

For the whole of 2006, the Home Price Index rose by 5.9%, after a rise of 2.5% in 2005.

Cyprus Estate Agents

Nigel Howarth
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When buying property in Cyprus, you will invariably come into contact with the odd ‘crook’ who will try to relieve you of your money.

Approved by parliament at the end of 2004, the new Estate Agents’ Law was designed to protect property buyers from these rogues and conmen. Unfortunately, the law has proved ineffective and there are still many (mainly foreign) people being conned out of their money by unscrupulous property middlemen.

Property middlemen receive a commission or finders fee from the developer or agent when they introduce a client. Some of these middlemen insist on taking you to their homes to meet their family and enjoy some of the famous Cypriot hospitality. Placing your trust in these people is, to say the least, extremely foolish!

It’s a sad fact of life, but many retired Britons in Cyprus act as property middlemen, preying on the fears (and wallets) of their fellow countrymen. Just like the Cypriot middlemen, these also receive a finders fee, commission, or consultancy fee from their ‘friends’ in the property business when they introduce a client.

It makes no difference whether you allowed yourself to be conned by an affable and generous Cypriot or a silver tongued Briton acting illegally, the end result will be exactly the same!

Who can you trust?

Legally practicing Estate Agents are registered with the CREAA (Cyprus Real Estate Agents Association). They are required to carry professional indemnity insurance and operate to a defined code of conduct.

To find out whether or not the estate agent you are dealing with is registered, ask to see their Registration Certificate; this contains their name and registration number.

If you have any doubts as to whether the estate agent you are dealing with is registered, here are a couple of useful addresses.

Cyprus Real Estate Agents Association (CREAA)
17 Hadjiloizi Michaelides Street
P.O. Box 50563
3041 Limassol
Tel: 25 367467

Board for the Registration of Real Estate Agents
P.O. BOX 21455
1509 Nicosia
Tel: 22 666377

Property consultants

Trustworthy property consultants are members of FIABCI – the International Real Estate Federation. Although legally, they cannot advertise themselves as Estate Agents, they are bound by an international code of ethics. A number of registered Estate Agents are also members of FIABCI.

Planning Permission and Building Permits

Nigel Howarth
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Anyone who has dealt with the authorities in Cyprus will appreciate the paperwork and bureaucratic processes involved. But did you know that as many as 10 different permits from various local & central Government authorities may be required before a property can be legally built, owned and lived in!

You may also be surprised to learn that some property developers will sell property off-plan and start building before they are legally entitled to do so.

This can cause problems! For example, a couple signed a contract with a developer to buy a third floor apartment off-plan. Several months and stage payments later, the developer told them that they couldn’t have an apartment on the third floor, so they were changing the contract for one on the second floor. Needless to say the couple were very annoyed! They were absolutely furious when they discovered they couldn’t get out of their contract or get their money back! (Needless to say, they didn’t use an independent lawyer).

It subsequently transpired that the developer’s application to build a three storey block of apartments had been rejected by the authorities; permission was granted for a two storey block.

It is illegal to build without the required Town Planning & Building permits and it’s essential that your lawyer checks to see that they’ve been issued for the property you’re thinking of buying.

If permits have not been issued, you need to hold any money, such as deposits & stage payments, in escrow until the developer produces the permits to your lawyer. (Escrow is the holding of money and important documents related to the purchase and/or sales of a property by a neutral third party (the escrow officer) prior to the close of the transaction).

Article 10 of the Streets and Buildings Regulations Law, Cap. 96, states that no-one may occupy a building unless a Certificate of Approval for it has been issued by the appropriate authority!!. If the authorities decided to enforce that particular law, there wouldn’t be enough space in the prisons to hold all the offenders!

Selling your property in Cyprus

Nigel Howarth
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In previous articles I’ve stressed the need for buyers to take independent legal advice when buying property in Cyprus. Unfortunately, many buyers fail to heed the advice and end up with all sorts of problems, one of which I discuss in this article.

But even assuming that they’ve taken independent legal advice, buyers do not always appreciate that the ways of working in UK and Cyprus are completely different.

For example, anyone who has bought in the UK will be familiar with things like surveys, local authority searches and preliminary enquiries that are carried out before contracts are drawn up and signed. But in Cyprus, these types of checks tend to be the exception rather than the rule.

Although many lawyers acting on behalf of foreign clients understand the many issues, I thought it worthwhile to outline one of those issues and how it may be addressed. You need to discuss this with your independent legal representative here in Cyprus.

Contract considerations

It sounds a bit odd to be thinking about selling your property when you’re buying it; let me explain:

When buying property in the UK, if either party decides to pull out of the deal after contracts have been exchanged and before Completion, they have to compensate the other. The same is true in Cyprus; once you’ve signed a contract, there is no escape until Completion unless you’re prepared to compensate the other party.

(Completion occurs when the sale and purchase of the property are finalised, and the buyer becomes its legal owner. In Cyprus, this is achieved when the Title Deed to a property is registered in the name of the buyer).

This isn’t too much of an issue in the UK. Contracts are exchanged and Completion takes place a couple of weeks later. But in Cyprus, Completion can take several years – I know many people who have been waiting more than ten years for Completion and some who have been waiting for more than twenty!

And herein lays the problem – if you should want to sell you property before Completion, you must compensate the ‘other’ party. To avoid this issue, your lawyer needs to include a “right to sell” clause into your contract. This will look something like the following:

“If at any time after the signing of the present agreement the Purchasers desires to sell the said Property, they will have an absolute right in doing so as they are deemed to be the beneficial owners of the Property providing that the Purchasers have fulfilled all their obligations as herein provided. The Vendors shall be obliged and cannot in any way object to and /or deny and/or withhold their consent to sign any necessary cancellation contract and new contract of sale with the new purchaser/s, provided that the vendors shall not be liable for any taxes and/or other related expenses as a result of such transaction.”

I recommend that your lawyer includes a separate clause limiting any ‘related expenses’ to a reasonable figure, say CYP 500 or CYP 1,000; this will be sufficient to cover any legal costs incurred by the developer.

To illustrate how important it is for your lawyer to limit these expenses, one developer demanded 15% of the purchase price (in cash) before agreeing to cancel a contract!

The Church says it will finish our homes but the big question is when?

Leo Leonidou
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RESIDENTS of a Paphos development who have been waiting for their title deeds for over ten years have cast doubt over Church claims that they will be ready by the end of the year.

The Interior Ministry has instigated proceedings against the Ayios Pavlos Church, accusing the institution of failing to obtain a completion certificate and title deeds for 22 properties it sold over ten years ago.

According to the owner of one of the properties of the Kitrikes Village development in Armou, the Ministry is also taking the residents to court on May 15 for, “illegally living in their houses without title deeds”.

Graham John Cooper-Selley told the Sunday Mail that several Church advisers have been summoned to appear in court for non-completion of site as per the planning permit, with eight residents this week being summoned by bailiffs.

The civil engineer explained that the Church has promised to finish all the work required to complete the site as per the planning permit, “but this is highly unlikely due to the volume of work required at a cost of over £100,000”.

The 68-year-old said that the Church has been promising an end to the saga for years.

“They keep saying that they will complete but the big question is when,” he said. “Four years ago, three of our Cypriot residents were granted an audience with then Bishop of Paphos and now Archbishop Chrysostomos, who promised them the Church would finish the site.

“He joked that he would bring the whisky if we cooked the souvla at a celebration party but we are still in the same situation and the Church just does not seem to realise the extent of the work required.”

According to Cooper-Selley, an access road still needs to be widened and a perimeter footpath constructed. Road and car parking top surfacing has to be carried out, while the drainage infrastructure is not complete.

The Paphos Bishopric acknowledged that there is a problem and promised that the situation would be resolved, with people receiving their deeds by the end of the year, if everything went to plan, saying it was, “important that the people receive their title deeds.

“Receiving the deeds by the end of the year as promised is not at all possible,” Cooper-Selley shot back. “An application takes three years to pass through the Land Registry.”

He also accused fellow residents of not appreciating the gravity of the situation. “They think that everything can be resolved simply by heading down to the Church and protesting. The facts are that on this site most of us have had possession of the properties for over ten years.

“We thought that buying from the Church would guarantee no problems for obtaining the title deeds and I wonder whether other property owners living in their houses without first obtaining their deeds realise that they are classified as criminals?”

The Mukhtar of Armou, Panicos Hadjitheorisis has been called a witness for the prosecution in the upcoming court case but he said that the residents have not done anything wrong.

“I am in constant communication with the Church and am pushing them to finish the required work so this unfortunate situation can be put to bed,” he said.

Cooper-Selley explained that he is feeling very aggrieved over what has happened.

“We’re being dragged to court for no reason and are innocent of any wrongdoing.

“We have done everything we can to push the Church, but our pleas have fallen on deaf ears.”

Copyright © Cyprus Mail 2007

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