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 many of them draw-up 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 don’t fulfil their side of the deal.

Lawyers in Cyprus are extremely busy and can use quite a lot of jargon to make you feel that they know everything and you don’t know anything.

Further…at the point of sale when you’re in a room with the solicitor, agent and and/or developer I've heard several tales that they all say, “Don't worry – everything is fine...” and “No Problem” to every question or worry you have. I often feel that some property professionals” will tell you anything you need to hear just to get you to sign. DON'T let this happen to you – before you get to the stage of signing a contract know exactly what MUST be in it to protect yourself!

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 2,000 to 3,000 euros 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:

You’ll want to holdback 1,500 Euros 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:

This part is very important. I have seen some developers late on completion – sometimes up to 6 months and even 1 year late - and of course this can be a very serious problem, especially if you have planned on letting the property as you will be losing out on rental income.

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 50 Euros per day as a penalty charge. This means a total of 3,000 Euros 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 1,500 euros which will be released when you will get your title deeds. This is KEY – by holding back 1,500 euros 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.

One Final Note:

As I was saying at the outset, bear in mind that all lawyers in Cyprus are extremely busy so you really do need to do your homework. Compare your contract of sale to make sure these 8 important points are on it and make sure to work with a lawyer who understands your needs.

I have heard many times from developers: “ We are never late on completion” so now you can reply, “Ok if you are never late it should not be a problem to sign this agreement stipulating a compensation of 50 euros/day for every day you ARE late”….!