J
Janoulaki
New Member
I know it is a long advice, but whoever has got a chance to get a contract right, please do so!!!!
Contract of Sale for Buying Off-Plan
One of the most important factors to take into consideration when buying a property in
Cyprus is to ensure that your contract of sale protects YOU rather than just the developer. In
Cyprus, you have thousands of developers; some are good and some are not so good but
even the good ones sometimes don’t fulfil their obligations, for a variety of reason. The main
safeguard you have is the contract of sale.
I have seen a lot of lawyers and realised most of them draw a contract of sale which is in
favour of the developers. The reason behind it is obvious: by safeguarding the developers,
the lawyers will be assured of generating more business. What I am going to point out are
many buyers’ errors and I want you to learn from their mistakes so if something goes wrong
you are protected if the developers doesn’t fulfil their side of the deal.
Most of the lawyers in Cyprus are extremely busy and they use quite a lot of jargon to make
you feel that they know everything and you don’t know anything.
If your contract of sale does not include the following points, ask your lawyer to make the
necessary changes and if he or she does not want to, I suggest that you change your lawyer.
1. How to release the money
Most of the payments are due by stage payment. Usually you pay a reservation fee
of around 2,000CP (€3,420) to take the property off the market and then 30 days
later you’ll need to pay a deposit of 20% - 30% minus the reservation fee.
This 30% corresponds to the value of the land and then throughout the construction
you pay by stage payment.
A typical example would be:
- 20% Deposit
- 20% on completion of the concrete frame
- 20% on completion of the brickwork
- 20% on completion of the electrical installation, plastering, flooring and
carpentry work
- 20% on delivery
You’ll want to holdback 1,000CP (€1,710) on transfer of title deeds, but I’ll discuss
that later.
On your contract of sale, you need to have a clause saying that the money will be
released only if a civil engineer has confirmed that the phase has been
completed properly.
By the same token, if you have paid a small deposit with the rest due on completion
the work has to be check by a Civil Engineer before you release the money.
You ONLY have to pay the developer when you know that they have done their job
properly and the only way to be sure of that is to appoint a civil Engineer who will
check on your behalf.
Do make sure that this is clearly stipulated in your contract
2. Protection against late delivery:
On the Sale Agreement, the developer has a period of grace for 1 month. After that,
you’ll want to ensure that there is a penalty charge, which MUST be specified in the
contract.
Make sure you are happy about the amount that you will receive per month for
compensation. If you have planned to relocate for instance it will need to cover the
cost of alternative accommodation …
If you buy an apartment, ‘completion’ means that your flat must be in a liveable
condition but it also includes completion of communal facilities such as the swimming
pool and landscaping of the gardens.
Also make sure that you don’t have a clause that stipulates that you, the purchaser,
may NOT hold back any portion of the total purchase price, so if the developer is late
you have the freedom to withhold payment.
For example, you could state in the contract that if the developer is 3 months late on
the completion date, they are obliged to pay you 30 CY£ (€51.30) per day as a
penalty charge. This means a total of 1,800 CY£ (€3,078) which you may deduct on
the last payment, allowing for the 1 month period of grace.
Also within this particular clause, you’ll want to stipulate that you can sue the
developer for compensation if they are making you wait too long.
3. Protection against no-approval from the land registry:
After you have bought your property, the developer has to make a deposition of your
agreement to the Land Registry for approval. If it is NOT accepted you need a
clause in the contract to state that the developer needs to repay any amount
previously paid by you IMMEDIATELY.
4. Guarantee:
You need to ensure that your contract has a 1 year guarantee for the
installations and area which directly affect the normal and proper functioning
occupation. More than 1 year would be better but developers will usually not
guarantee that. You’ll also want to stipulate a 10 year guarantee on the structure.
5. Freedom to sell any time:
Your contract needs to state that you can sell the property any time after signing the
sale contract, without penalty. This allows you to sell prior to completion. If you’re
buying property to sell for a profit, this allows investors the ability to sell before the
final payment is due. It is also helpful to have this freedom in the event that your
circumstances change.
6. Stipulation of the date of the delivery:
In your contract, you want to specify a date when you will get the title deed. Here I
suggest no more than 4 years, and if it does not happen you want to have an option
to get your money back with interest of no less than 9%.
Also the sale agreement should stipulate that you are going to hold back 1,000 CP£’s
(€1,710) which will be released when you will get your title deeds. This is KEY – byholding back 1,000 CP£’s (€1,710) you’re preventing the developer from
disappearing on you, never to be seen again!
7. Protection in case the developer cannot get the planning and building
permission:
If for any reason the developers are not able to obtain the planning and building
permit you MUST ensure that you have the option to terminate the agreement. In
such an event the developer will be obliged to return any amount received
immediately with interest (around 9%) back to the purchasers.
8. Insured during the construction:
You MUST make sure that your contract states that as long as the building is under
construction the developer will insure the said property against fire, earthquake and
any foreseeable risk. The developer will bear this cost and the insurance will be in
effect until the day, the developer will deliver the property to the purchasers.
For full Cyprus Buying Guide visit:
Untitled Document
or
send me an email
Good luck!
Contract of Sale for Buying Off-Plan
One of the most important factors to take into consideration when buying a property in
Cyprus is to ensure that your contract of sale protects YOU rather than just the developer. In
Cyprus, you have thousands of developers; some are good and some are not so good but
even the good ones sometimes don’t fulfil their obligations, for a variety of reason. The main
safeguard you have is the contract of sale.
I have seen a lot of lawyers and realised most of them draw a contract of sale which is in
favour of the developers. The reason behind it is obvious: by safeguarding the developers,
the lawyers will be assured of generating more business. What I am going to point out are
many buyers’ errors and I want you to learn from their mistakes so if something goes wrong
you are protected if the developers doesn’t fulfil their side of the deal.
Most of the lawyers in Cyprus are extremely busy and they use quite a lot of jargon to make
you feel that they know everything and you don’t know anything.
If your contract of sale does not include the following points, ask your lawyer to make the
necessary changes and if he or she does not want to, I suggest that you change your lawyer.
1. How to release the money
Most of the payments are due by stage payment. Usually you pay a reservation fee
of around 2,000CP (€3,420) to take the property off the market and then 30 days
later you’ll need to pay a deposit of 20% - 30% minus the reservation fee.
This 30% corresponds to the value of the land and then throughout the construction
you pay by stage payment.
A typical example would be:
- 20% Deposit
- 20% on completion of the concrete frame
- 20% on completion of the brickwork
- 20% on completion of the electrical installation, plastering, flooring and
carpentry work
- 20% on delivery
You’ll want to holdback 1,000CP (€1,710) on transfer of title deeds, but I’ll discuss
that later.
On your contract of sale, you need to have a clause saying that the money will be
released only if a civil engineer has confirmed that the phase has been
completed properly.
By the same token, if you have paid a small deposit with the rest due on completion
the work has to be check by a Civil Engineer before you release the money.
You ONLY have to pay the developer when you know that they have done their job
properly and the only way to be sure of that is to appoint a civil Engineer who will
check on your behalf.
Do make sure that this is clearly stipulated in your contract
2. Protection against late delivery:
On the Sale Agreement, the developer has a period of grace for 1 month. After that,
you’ll want to ensure that there is a penalty charge, which MUST be specified in the
contract.
Make sure you are happy about the amount that you will receive per month for
compensation. If you have planned to relocate for instance it will need to cover the
cost of alternative accommodation …
If you buy an apartment, ‘completion’ means that your flat must be in a liveable
condition but it also includes completion of communal facilities such as the swimming
pool and landscaping of the gardens.
Also make sure that you don’t have a clause that stipulates that you, the purchaser,
may NOT hold back any portion of the total purchase price, so if the developer is late
you have the freedom to withhold payment.
For example, you could state in the contract that if the developer is 3 months late on
the completion date, they are obliged to pay you 30 CY£ (€51.30) per day as a
penalty charge. This means a total of 1,800 CY£ (€3,078) which you may deduct on
the last payment, allowing for the 1 month period of grace.
Also within this particular clause, you’ll want to stipulate that you can sue the
developer for compensation if they are making you wait too long.
3. Protection against no-approval from the land registry:
After you have bought your property, the developer has to make a deposition of your
agreement to the Land Registry for approval. If it is NOT accepted you need a
clause in the contract to state that the developer needs to repay any amount
previously paid by you IMMEDIATELY.
4. Guarantee:
You need to ensure that your contract has a 1 year guarantee for the
installations and area which directly affect the normal and proper functioning
occupation. More than 1 year would be better but developers will usually not
guarantee that. You’ll also want to stipulate a 10 year guarantee on the structure.
5. Freedom to sell any time:
Your contract needs to state that you can sell the property any time after signing the
sale contract, without penalty. This allows you to sell prior to completion. If you’re
buying property to sell for a profit, this allows investors the ability to sell before the
final payment is due. It is also helpful to have this freedom in the event that your
circumstances change.
6. Stipulation of the date of the delivery:
In your contract, you want to specify a date when you will get the title deed. Here I
suggest no more than 4 years, and if it does not happen you want to have an option
to get your money back with interest of no less than 9%.
Also the sale agreement should stipulate that you are going to hold back 1,000 CP£’s
(€1,710) which will be released when you will get your title deeds. This is KEY – byholding back 1,000 CP£’s (€1,710) you’re preventing the developer from
disappearing on you, never to be seen again!
7. Protection in case the developer cannot get the planning and building
permission:
If for any reason the developers are not able to obtain the planning and building
permit you MUST ensure that you have the option to terminate the agreement. In
such an event the developer will be obliged to return any amount received
immediately with interest (around 9%) back to the purchasers.
8. Insured during the construction:
You MUST make sure that your contract states that as long as the building is under
construction the developer will insure the said property against fire, earthquake and
any foreseeable risk. The developer will bear this cost and the insurance will be in
effect until the day, the developer will deliver the property to the purchasers.
For full Cyprus Buying Guide visit:
Untitled Document
or
send me an email
Good luck!
