FAQ REAL ESTATE
PURCHASE OF A PROPERTY
1. What is a Reservation Deposit Agreement?
A reservation deposit agreement is made between the Seller and the Purchaser for a specific amount. The Seller is usually obliged to remove the property from the market during the reservation period.
The reservation fee is based on the purchase price and is normally between €1,000 and €10,000, depending on the situation, and is usually held in trust by the estate agent or the Seller’s lawyer until the agreement is finalized.
2. Is a Reservation Agreement compulsory?
A Reservation Deposit Agreement is not compulsory and it is in the discretion of the Seller and Purchaser to entered into the said Agreement prior to the signing of their Sales / Assignment Agreement.
3. Is it possible for Property to be sold through Probate?
Yes, provided that the relevant probate order appointing an Administrator of the Deceased estate and the relevant probate tax clearances have been issued.
4. Is it possible for a Property to be transferred as a Gift?
Yes, the transfer of Property as a gift is usually taking place between persons who have family bonds with each other, e.g., parents to children.
5. Who needs a Council of Ministers Permit and are there any conditions for its issue?
A Third Country National registering a Property in his/her name in Cyprus needs a Council of Ministers permit. A National or European Union Citizen does not need Council of Ministers permit.
There are specific conditions for the issue of the Council of Ministers permit, as to the number, the size and the type of a Property or Properties the Third Country National is entitled to acquire in Cyprus.
6. What if I am Not in Cyprus to handle my Property Purchase or I need a third party to handle with my transaction for any other reason whatsoever?
When such circumstances arise, it is possible for the Purchaser to grant a power of attorney appointing a third party as their representative for the purposes of their transaction in Cyprus.
Our Law Firm’s members may also undertake to act on the behalf of the Purchaser or the Seller through the whole conveyancing procedure as their lawful legal representative, before all the necessary government authorities in Cyprus, provided that a relevant power of attorney is granted.
Please note that as soon as the drafting of the relevant power of attorney is concluded, it will need to be properly signed and duly stamped and certified.
7. How long does it take for the Property Purchase to be completed?
The Purchase can take several months, depending on the specific circumstances of each property purchase, e.g., whether a sales or an assignment agreement will need to take place.
It’s advisable to work with a Cyprus lawyer to navigate potential delays and ensure all legal requirements are met.
8. Is a Purchaser able to rent his/her Property?
Yes, a Purchaser can rent out his/her property.
However, rental income must be declared in Cyprus, and there are regulations regarding short-term rentals in certain areas.
On another note, GESY and Defence contributions, are also imposed on rental income.
Additionally, you may need special licenses for holiday rentals in accordance with the “Law on the Regulation of the Establishment and Operation of Hotels and Tourist Accommodation of 2019”.
VAT, might also be imposed where the Property is rented for the purposes of running a business.
9. Why shall a Property Purchaser instruct a lawyer to monitor his/her transaction?
Hiring a Cyprus lawyer is highly recommended, since a lawyer will assist with due diligence for the Purchaser’s transaction, ensure the property is free from encumbrances, draft or review the Contract of Sale, and guide the Purchaser through the whole transaction process, securing the Purchaser’s legal rights in the best way possible.