LEGAL ISSUES IN
PROPERTY DEVELOPMENT
IN CYPRUS
Andrew Demetriou LL.B (Hons), Barrister at Law, FCI.
Arb, Chartered Arbitrator, Partner - Ioannides
Demetriou Law Offices LLC
Basic Characteristics of Land Law
Land law in Cyprus is governed by the
Immovable Property Law of Cyprus, Cap. 224,
which is a piece of colonial legislation having the
title “A Law to Consolidate and Amend the Law
relating to Tenure, Registration and Valuation
and Ownership of Immovable Property” and it is
dated 1st September 1946.
Section 2 of the Law defines immovable property as follows:
(a)land;
(b)buildings and other erections, structures or fixtures affixed to
any land or to any building or other erection or structure;
(c) trees, vines, and any other thing whatsoever planted or
growing upon any land and any produce thereof before
severance;
(d)springs, wells, water and water rights whether held together
with, or independently of, any land;
(e)privileges, liberties, easements and any other rights and
advantages whatsoever appertaining or reputed to appertain
to any land or to any building or other erection or structure;
(f) an undivided share in any property hereinbefore set out.”
and Section 4 of the Law states that
subject to certain exceptions, such as Trusts, which
of course confer equitable rights, and Vakfs (Turkishcypriot property rights) and the provisions of any
Law in force for the time being, no estate, interest,
rights, privilege, liberty, easement or any other
advantage whatsoever in, on or over any
immovable property shall subsist or shall be
created, acquired or transferred except under the
provisions of this Law”.
Therefore, in Cyprus Law one can only
own property as described above.
Land Registration
Cyprus Land Registry System is unique in that all
title to land is traced back to the date of the
“General Survey”, that is to say from 4.6.1878.
Any right vesting in land or any right or right of way or easement
vesting in land belonging to another is only recognised if it is:
• Derived from the owner and registered at the lands registry;
• Except in the case of land belonging to the Republic, if it is a right
peacefully enjoyed, unchallenged for a continuous period of 30
years;
• Where it is derived by way of a court judgment, e.g. under the rules
of specific performance;
• If it is derived by an edict or valid document prior to 4.6.1878;
• If it is an acquired right of way to an enclosed property under
Section 11A of the Law;
• Where it is compulsorily acquired in accordance with the
Compulsory Acquisition Law 1962 for a public benefit purpose;
• Where it is subject to a provision retained by the owner upon
transfer (e.g. for rights for life to collect rents from a property, or to
reside in a property).
Acquisition of Title
Cyprus is one of the few places on earth where
one can acquire registered legal title in land one
day without the need for a written contract.
Contracts relating to land can be “specifically
enforced” in accordance with the Sale of
Immovable Property (Specific Performance) Law,
Cap. 232.
Additionally, Section 76 of the Contract Law, Cap. 149, also
provides as follows without prejudice to the specific rights
conferred by Cap. 232.:
“(1) A contract shall be capable of being specifically enforced
by the Court if• it is not a void contract under this or any other Law; and
• is expressed in writing; and
• the Court considers, having regard to all the
circumstances, that the enforcement of specific
performance of the contract would not be unreasonable
or otherwise inequitable or impracticable.
(2) Nothing herein contained shall affect the specific
performance of contracts for the sale of immovable
property under the provisions of the Sale of Land (Specific
Performance) Law, or any amendment thereof.”
Requirements for Specific
Enforcement under Cap. 232
Section 2:
(a) There must be a written contract.
(b) It (or a copy of it) must be deposited at the District Lands
Office in which the land is situated within two months of
the date of the contract.
(c) There must be a demand from the purchaser to the
vendor to appear at the District Lands Office to sell the
land.
(d) The action must be filed within six months from the date
either when the contract is concluded or the date when
consideration under the contract passes from the
purchaser to the vendor, whichever is the latter.
Further, Section 77 of the Contracts Law provides as
follows with respect to contracts relating to leases of
land:
“(1) Contracts relating to leases of immovable property
for any term exceeding one year shall not be valid
and enforceable unless(a) expressed in writing; and
(b) signed at the end thereof, in the presence of at
least two witnesses themselves competent to
contract who have subscribed their named as
witnesses, by each part to be charged therewith
or by a person who is himself competent to
contract and who has been duly authorised to
sign on behalf of such Party.”
However
There is case law in Cyprus that shows that a
verbal contract for the sale of land can be
enforced if it is proved, although it may not be
specifically enforced.
Consequences of Breach of Contract
Section 74 of the Contracts Law, Cap. 149, provides as follows:
“(1) When a contract has been broken, if a sum is named in the
contract as the amount to be paid in case of such breach, or if the
contract contains any other stipulation by way of penalty, the
Party complaining of the breach is entitled, whether or not actual
damage or loss is proved to have been caused thereby, to receive
from the Party who has broken the contract reasonable
compensation not exceeding the amount so names or, as the case
may be, the penalty stipulated for.
A stipulation for increased interest from the date of default may
be a stipulation by way of penalty.
(2) When ay person enters into any bailbond, recognizance or other
instrument of the same nature, or, under the provisions of any Law,
or under the orders of the Government of Cyprus, gives any bond
for the performance of any public duty or act in which the public
are interested, he shall be liable, upon breach of the condition of
any such instrument, to pay the whole sum mentioned therein.
Provided that a person who enters into a contract with Government
does not necessarily thereby undertake any public duty, or promise
to do an act in which the public are interested.”
Vendor / Developer Issues
• Methods of Acquisition
• Either a straight sale or by way of postponed
consideration (αντιπαροχή).
• The deposition of the Sale Agreement by the
developer.
• The necessity for interim / co-ownership.
• The acquisition of planning approval.
• The acquisition of a building permit.
• The acquisition of a final building permit.
Conclusions
• Secure title for the purchaser
• Enforceable rights for the purchaser
• A vendor who parts with title may be left
exposed
• Possibility of sub-division and issue of
separate titles