Conveyancing is the process of the legal transfer of ownership of immovable property from the seller to the buyer. The conveyancing process starts when the buyer’s offer to buy a property is accepted and finishes when the buyer receives the keys. This guide explains the steps taken for the successful completion of a typical conveyancing procedure. Modifications of the stages typically occur in order to facilitate the peculiar circumstances of parties.
Choice of property & payment of deposit
All conveyancing transactions begin when the Buyer chooses a property to buy and makes an offer to the Seller. The offer is usually made to the real estate agent who acts as the agent of the seller. If the seller accepts the offer the buyer is requested to pay a reservation deposit which usually takes the property off the market for a period of 30 days (or as otherwise agreed). Sometimes the reservation deposit is paid by the buyers directly to their lawyer who will make arrangements to pay it over to either the agent or the seller’s lawyer.
Instruction of lawyers & preparation of contracts
After reaching an agreement and the seller receiving the reservation deposit, the buyer and the seller must instruct their respective lawyers. If the parties will not be in Cyprus to deal with the sale/purchase they will need to sign power of attorneys so that they can be represented in Cyprus for the conveyancing transaction. In order to prepare the contracts, the buyer’s lawyer will request documents and information from the seller’s lawyer regarding the property. Such information usually consists of recent land registry search results, list of contents etc. If the information and searches are satisfactory then contracts are drafted. Usually draft contracts are sent between the lawyers back and forth with changes until there is a final draft that both lawyers are satisfied with. The two lawyers then send the final draft of the contract to their respective clients for their comments or approval.
The contract contains important information about the transaction such as:
When the seller and the buyer have both agreed the terms of the contract, the lawyers will arrange the signing of the same provided that the Buyer’s lawyer holds the necessary funds from the Buyer to pay the amount which is payable on the signing of contracts.
Transferring funds to Cyprus
The buyer must have funds available to pay for the purchase of the property and related expenses. The funds should be in Cyprus, in the buyer’s bank account or the client account of his lawyer upon signing the contract. Typically, the buyer will transfer the money to his lawyer’s clients account because it provides security to the seller that the buyer will conform with the contract. This also allows the buyer to avoid the hassle of personally making the necessary payments. In order for the lawyer to be able to receive funds from the buyer to pay the purchase price and related expenses (e.g. the land registry fees), the lawyer will need to open a sub-account in the name of the buyer within the law firm’s Clients Account. This sub-account will serve only for the particular transaction and shall be closed once the matter has concluded. The lawyer of the seller will also need to open a similar sub-account to receive the sale price. Due to the constantly changing global environment relating to anti-money laundering banks in Cyprus have become extremely vigilant and now require a great deal of documentation to be supplied to them (both for the buyer and the seller) in order to allow the opening of a bank account and to allow the deposit of funds.
After signing the contracts
When contracts have been signed, these must get stamped at the Inland Revenue. The buyer usually pays for the stamping of contracts and passes a stamped contract to the seller’s lawyer. Once contracts have been signed and stamped at the Inland Revenue, the buyers’ lawyer will then lodge the stamped contract at the Land Registry for Specific Performance purposes. The seller’s Lawyer will use the stamped, signed contract and other documents to apply to the Inland Revenue for the Tax Clearance Certificate for the sale. This is when the Inland Revenue will calculate if there was a profit made, what tax should be paid if any etc. This process may take around 10 -15 days to be completed but a lot depends on the time of application (e.g. August, Christmas, Easter) so sometimes it may be quicker and sometimes it may take longer. This means that the seller will need to allow sufficient time from the date of signing of contracts until the Completion Date to ensure that he has obtained the Tax Clearance Certificate.
Completion of transaction
The buyer’s lawyer must make sure that he has received the funds for the balance of the purchase price and all other necessary funds by the Completion Date. The seller’s lawyer must hold the Tax Clearance Certificate in order for Completion to take place. On the Completion Date, the buyers’ lawyer gives the seller’s lawyer the balance of the purchase price, the seller’s lawyer gives the buyers’ lawyer the keys and the buyers’ Lawyer usually gets the Title Deed transferred and registered into the buyer’s name. After the Completion the buyer must make arrangements to connect the utilities in his name. Changing the locks of the property and property insurance are also highly recommended.
Note: The above information should only be used as a general guide. Legal advice should be sought for the specific matter in question. To learn more about our services related to properties click here