law-firm-cyprus

Devising a mechanism to achieve an innovative and flexible restriction on property title

Mr E had an English Court of Protection Order against him for being incapacitated to make decisions and two solicitors had been appointed to act as his deputies. Mr E’s doctors had advised that he moved to a warmer and sunnier climate and his deputies together with his family located a property to buy in Cyprus.

While the assets of Mr E in the UK were subject to the control of the deputies according to the English Court of Protection Order in place, that would not have happened in Cyprus allowing him to subvert the order for his Cypriot assets. Mr Edwards could in the future sell the property to be purchased and taking the cash, a risk that his family and the deputies wished to protect against.

In the UK, Mr E’s deputies could register the Court of Protection order on the title deed of properties acquired and Mr E would not have the ability to proceed with the transfer of title without their consent. Cyprus however does not have the same provisions under its law as in the UK that would allow such an order to be registered on the title deed restricting the alienation of the property.

To achieve the same results as provided under English legal provisions we had to devise a plan that would manage it indirectly under established Cypriot legal provisions. We discussed the plan with the deputies and agreed to proceed accordingly.

The plan included the registration of the English Court of Protection Order in Cyprus as a foreign judgment to give it effect in Cyprus. After this was done we created a specific trust, which was approved by the deputies (in their dual capacity as deputies and solicitors) and had as trustees the deputies themselves that would limit the ability of Mr E to sell the property as he would have liked but would also allow him the unrestricted ability to remain and use the property.

An important issue was to ensure that Mr E would not be able to use the rule in Saunders v Vautier, which provides that the beneficiaries of a trust may terminate the trust at any point. To avoid the risk of the Beneficiary trying to seek the termination of the trust directly through the Cyprus Land Registry which is generally inexperienced with dealing with trusts, we inserted a limitation to that effect in the trust deed itself and attached the English Court of Protection and the related Cypriot Court order allowing its enforcement on the trust deed itself.

Finally, we inserted a restriction on the alienation of the beneficial interest of the trust for as long as Mr E had a Court of Protection Order against him linking it again to the deputies’ approval for termination of the trust according to the Cypriot judgment enforcing the English order.

Taking into account the generally acknowledged inexperience of the Land Registry in dealing with trusts of land and especially their termination and disposal of beneficial interests we also planned around the risk of a mistake happening by the Land Registry. In effect we created a quasi-proprietary restriction on the property complying with the deputies’ obligations under the order.

As a result, Mr E moved to Cyprus according to his doctors’ advice and his family rested assured that he could not have been taken advantage of or having sold off the property without them knowing.

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