When we buy a property it is always important to have some written agreement that specifies the obligations of each contracting party. In this article we present the dangers that can lurk during the purchase of a real estate.
Most developers who sell new properties use the same document for all their sales, which could cause problems as a standardized contract could miss to include certain customized clauses that concerns the certain buyer’s needs and demands and can protect him from being exposed to unforeseen risks.
When it comes to second-hand properties, usually the parties do not sign any written agreement, with the excuse that doing so is an unnecessary expense. Nevertheless, there are countless cases in the courts concerning the purchase, sale, exchange, development and rental of real estate.
These cases are in the courts for years, since their trial is usually difficult, due to the fact that there is no written agreement between the parties or the existing agreement contains inaccuracies. This results in either the seller or the buyer losing large sums of money and not being able to enjoy the property. Appointing an experienced real estate law attorney is, in our opinion, essential. Our advice is not to sign any contract without first having it reviewed by a lawyer. It stands to reason that when someone gives you a document to sign, it will most likely contain terms that favor them more than you.
Research in the Land Registry
Although signing a written agreement is very important, it is not the only obstacle that can frustrate the buyer of a property in Cyprus. Our office has saved several of our clients from unnecessary expenses and inconvenience, after investigations we have conducted in the Land Registry where we found that some properties were subject of a dispute in cases pending in the Courts (e.g. divorce, civil disputes, etc.). In addition, a very common problem is that the apparent seller of the property is not the absolute owner or authorized by the owner to sell the property.
Additionally, a property may very likely be subject to a mortgage or other burdens that must be settled before the property can be transferred. In such a case, the buyer may incur unnecessary expenses such as appraisal of the property’s value, procedural expenses to secure a loan, insurance of the property and other similar expenses and in the end it will not be possible to acquire the ownership of the property.
Hidden Costs
Commission of the broker
It is also common that some hidden costs are not included in the written agreement you are asked to sign. Such costs could be for example: Commission of the broker/intermediary Although this is not a frequent threat, at some instances we came across cases where the buyer of a property was asked to pay the broker’s commission because that was the agreement the broker had with the seller of the property but for some reason the buyer was not informed for such thing before signing the contract.
Value Added Tax (VAT)
If you are into real estate in general, you will have noticed that on most property postings / advertisements, the seller states that the property MAY be subject to VAT. This means that they do not know if it is subject or not, but this information is extremely important, since it greatly changes the overall value of a property. Whether a property is subject to VAT or not is sometimes clear, for example when it concerns the sale of new properties then it’s definitely subject to the related VAT rate (19%)
When it concerns a resale of a property, then the answer is indeed unclear. In such cases we need to investigate it with the tax authorities. Our office is able to negotiate the VAT repayment obligation and give you a clear answer.
Other expenses
Some other costs that you should be aware of and are usually not mentioned in the agreement you are asked to sign are transfer fees, stamp duty, legal fees and/or property taxes.
Also, properties that belong to buildings with communal fees should clearly be mentioned in an agreement. In some cases there are unpaid communal fees which you need to know about. We also come across cases where the utilities in some apartments amounted to 100 euros per month which the buyer was not aware of.
Bill of sale
After the purchase and sale document is drawn up and signed, our office undertakes the filing of this document in the Land Registry. The benefit arising from his deposit is that the buyer acquires the legal right to the property, meaning the seller cannot change his mind and sell it to someone else. Otherwise where a written agreement is signed by the parties but not filed with the Land Registry, then the seller can effectively sell it to someone else in breach of the agreement and giving the buyer the right to claim compensation.
Will
If you have not prepared a Will, or already have a Will and later purchase a property, it is important that the property is included in the Will so that after your death your property is distributed to the people you wish. Otherwise, if you do not have a will, your property will be distributed based on the relevant legislation. Our office employs experienced and reliable people who undertake the drafting of your Will and the management of your assets during the execution of the Will. Our office has the knowledge and experience to assist you in all the above stages, in order to ensure that the act of buying or selling will be done safely and successfully.
Do not hesitate to call us at +357 97680423. We are always at your disposal.
