By: Eleni C. Louca, ADVOCATE – LEGAL CONSULTANT @ A. Karitzis & Associates LLC
Overview of Key Amendments to the Sale of Real Estate (Specific Performance) Law Ν.81(Ι)/2011
The recent enactment of the Sale of Real Estate (Specific Performance) Law Ν.81(Ι)/2011 introduces notable changes to the legal framework governing immovable property transactions. The amended legislative provisions aim to enhance buyer protection and simplify and secure the real estate purchasing process.
Article 4(1A) – Certificate of Survey:
The seller’s obligation to attach a Search Certificate applies only to Sale Agreements concluded after 12/12/2023. As the law does not explicitly state whether the Search Certificate should be dated five (5) days before or after the conclusion of the Agreement, both cases will be accepted for the deposit. Non-compliance may result in fines of up to €10,000.
Article 3A – Encumbrances and Required Declarations:
Article 3A provides that if the property is encumbered only by a deposited mortgage or another Sale Agreement and the owner is not prohibited from selling, a new Sale Agreement can be deposited with the Department of Lands and Surveys only if accompanied by: (a) a Type A declaration signed by the mortgage lender and vendor, acknowledged by the buyer, or (b) a Type C declaration signed by the buyer.
When immovable property is encumbered by a registered mortgage, the Sale Agreement can be submitted to the District Land Registry with a Type A declaration. This declaration allows the buyer and/or the seller to deposit 95% of the agreed purchase price into the seller’s bank account. By countersigning the Type A declaration, the mortgage lender commits to discharging or releasing the property from the mortgage. Failure to release enables the buyer to submit a Type B declaration, which allows the Department to transfer the property.
Alternatively, the buyer may submit the Sale Agreement without a Type A declaration by including a Type C declaration. This confirms the buyer’s awareness of the existing mortgage and their decision to proceed with the transaction despite the encumbrance.
Moreover, mortgage lenders who intentionally fail to accept the amount specified in the Type A declaration and do not provide the required Type B form to release the relevant property from the mortgage may face a penalty of up to €100,000.
Article 7(4A) – Special Performance Orders:
Courts may issue special performance orders for Sale Agreements with existing encumbrances if the buyer has paid the amount outlined in the Type A declaration.
Overall, the amendments to the Sale of Real Estate (Specific Performance) Law represent a significant step forward in addressing longstanding issues with encumbered properties. By streamlining procedures, enhancing transparency, and strengthening buyer protections, these changes create a more secure and efficient framework for property transactions. This proactive approach reflects broader efforts to promote trust and fairness in the real estate market in Cyprus, fostering confidence among all parties involved.
