Understanding Fraudulent Property Transfers in Cyprus
Cyprus has a coherent system for recording every transfer of immovable property, as such a transfer can only be executed through the Land Registry. This system allows for the tracking of any transfers made and provides the means to cancel those that were executed fraudulently.
At times, a transfer of property between two individuals and/or legal entities may be conducted with the intent to obstruct and/or delay a judgment creditor—defined as a person or entity that has a court judgment against the individual performing the transfer. In this case, the transfer is considered fraudulent, allowing the judgment debtor (the person indebted to the judgment creditor) to hinder, delay, or avoid the obligation to repay the judgment creditor.
The following example illustrates a fraudulent transfer: Person A obtains a court judgment against Person B for an amount of €100,000. To evade the responsibility of repaying Person A, Person B transfers their only valuable asset—a house—to their spouse. Such a transfer is fraudulent, as it was executed by Person B (the judgment debtor) with the intent to defraud Person A (the judgment creditor).
The Cypriot legal framework provides mechanisms for canceling such fraudulent transfers designed to defraud a judgment creditor, as outlined in Chapter 62 (The Fraudulent Transfers Cancellation Law).
Proving that a property transfer was fraudulent is generally easier when it occurs between close relatives, such as parents and children, siblings, or spouses (i.e., transfers made as gifts). Additionally, fraudulent transfers are more easily established when a commercial transaction occurs with no consideration (a monetary amount paid for the transfer) or with an unreasonably low consideration for the transfer. For instance, if Person A transfers a three-bedroom apartment in Nicosia to Person B for €20,000, this could be considered fraudulent. However, the existence of a fraudulent transfer can also be proven even if the property is sold, provided the transfer was aware that the transfer aimed to hinder or delay a judgment creditor.
According to Article 4 of Chapter 62, any transfer—whether by gift or otherwise—that is deemed fraudulent under the law may be canceled by a court order obtained through an application by the judgment creditor. This holds true regardless of whether the fraudulent transfer was executed before or after the commencement of the legal action or procedure that established the judgment creditor’s rights for debt recovery.
Our team of Cyprus lawyers can assist you by providing the necessary legal advice and guidance for the cancellation of a fraudulent transfer. Furthermore, our Cyprus law firm has extensive experience in matters of property law, including the cancellation of fraudulent transfers, commercial property transactions, and gift transfers. We offer a wide range of services related to these issues.
