Transfer of blocked title Deeds

Cyprus Trapped Buyers Law 

In 2015, the Parliament in Cyprus introduced the Law 139(Ι)/2015, commonly known as the “Trapped Buyers Law” to address issues faced by property buyers who were unable to obtain title deeds for the properties they purchased, despite having fulfilled their contractual obligations. 

Under Trapped Buyers Law, trapped buyers could apply to the Land Registry for the transfer of title deeds. If successful, they managed to “bypass” the developer and achieve the transfer of the title deeds for the properties they purchased into their names.

This guide explains the procedure for transferring the Title Deed of a property in Cyprus where the developer has failed or is incapable of doing so, for example, because of pre-existing mortgages, other charges on the title, or financial problems.

Requirements for a Blocked Title Deed Application

To apply for a blocked title deed application, buyers of a property in Cyprus must have fulfilled their contractual obligations to the vendor. Typically, this would mean that they paid the entire purchase price. If they haven’t done so already, the Land Registry will require the payment of the purchase price to allow the application.

To apply to the property in question, a contract of sale or an assignment contract must have been lodged in the land registry by December 31, 2014. If the purchase contract was not lodged in the Land Registry, the buyer of a property in Cyprus should apply for a Court order permitting the lodging of the agreement. Once it is issued, the applicant may apply.

Who may apply for a blocked title deeds application?

The law permits the following people to apply:

• Buyers. Any buyers who have yet received the Title Deed to the property in Cyprus they purchased may apply for its Title Deed regardless of whether its Title Deed has been issued; the fact that there may be a mortgage, etc., preventing its transfer is immaterial. In cases where the Title Deed has yet to be issued, the applicant has the right to apply to the Department of Lands and Surveys for the compulsory acquisition of title according to the provisions of Part VI of the Immovable Property (Tenure, Registration and Valuation) Law, Cap. 224. Where the property in Cyprus has been purchased in joint names, both buyers don't need to apply. Instead, one of the buyers may apply.
• Assignees
• Sellers.
• Lenders
• The Director of the Department of Lands and Surveys

The Procedure

There are typically 4 steps for applying for the transfer of blocked title deeds in Cyprus:

1. Lodging an application
Completed Title Deed Applications Forms may be filed at any Land Registry Office in the Republic regardless at which their Contract of Sale was deposited.
The applicant-buyer of a property in Cyprus needs to submit the relevant documents to support their application (the existing title deed for the property, proof that the money for purchasing the property was deposited in a financial institution (e.g. a bank), the fulfilment of all contractual obligations to the vendor (taxes etc.)
If the applicant-buyer declares that he has not paid the full purchase price, he will be required to pay the balance into a special temporary account in the name of the Director of the Department of Lands and Surveys. This money will not be paid to the vendor until the Title Deed for the property has been issued and registered in the purchaser's name.

2. Land Registry’s examination of the application
Once the Land Registry has accepted the Title Deed application, they will investigate the case. The Land Registry will check the three basic conditions regarding the property in Cyprus that must be satisfied before the transfer of the Title Deed in the name of the buyer can take place, specifically that:

• The property’s purchase price has been paid in full
• The title deed for the property exists.
• The title deed for the property exists.
• The property buyer has fulfilled their contractual obligations and paid the taxes.

3. Notices
Once the above three provisions have been satisfied, the Department of Lands and Surveys in Cyprus (the Land Registry) will send interested parties* a notice advising them that it intends to transfer the property to the purchaser and requesting any objections they may have, giving them 45 days to respond.
The Department of Land and Surveys in Cyprus will investigate any objections it receives and will advise interested parties of its decision once its investigation has been completed.

4. Transfer of the title deed
Once investigations have been completed, notices will be sent to the buyer and to the vendor requesting them to transfer the property to the buyer with 60 days of the notice being issued – and requesting the buyer to pay the Property Transfer Fees within the 60-day notice period. Within the 60-day notice period, the buyer may attend the DLO without the vendor being present and pay the Property Transfer Fees.
Note that if the buyer fails to pay the Property Transfer Fees, the transfer will still go ahead. However, an encumbrance will be lodged against the property corresponding to the amount of the transfer fees increased by fifty per cent. However, If the transfer takes place by 31st December 2016, a further 50% reduction in transfer fees will be applied if the purchaser did not pay VAT on the property’s purchase price – or a 100% reduction if the purchaser did pay VAT on the purchase price.

*Interested parties are those who have registered ‘encumbrances’ (claims) against the property in question and have the opportunity to object to the transfer and/or request the transfer of their encumbrance within the 45-day period. Note that the vendor (developer) may only object if the buyer has not fulfilled his contractual obligations. The contract is void.

Recent Court Ruling on Trapped Buyers Law

A recent ruling by the Court of Appeal in Cyprus, following an appeal by a banking institution against a lower Court decision, has significant implications for the trapped buyers. The Court found that the provisions of the Law, which allowed the transfer of title deeds to buyers despite the existence of mortgages, infringed the rights of creditors, i.e., the banks. This decision deems these provisions unconstitutional, emphasizing the banks’ rights to retain claims on mortgaged properties, even if they are sold to third parties. 

Although the Court of Appeal's decision does not void the “Trapped Buyers Law”, as it only applies to the case in question, the authorities suspended not only the continuance of the review of the applications already submitted by trapped buyers with the District Land Registry Departments but also the acceptance of any new applications.

The Parliament will need to consider alternative legislative measures or amendments to address the constitutional issues highlighted by the Court. This could involve drafting new laws to ensure the balanced protection of trapped buyers while upholding the constitutional rights of creditors.

We expect updates from the Parliament in the coming months. They will have to address these constitutional issues and find a fair solution that protects both buyers and creditors.

To learn more about the recent changes of the law, click here.