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When you agree to buy immovable
property which has no title deed, for instance when the property is still
under construction or if there are financial and/or other pending issues that
postpone the transfer of the property to the purchaser at a future date, it
is recommended to conclude and sign a Sale Contract (SLC). Where a title deed
is available and it is transferred in the name of the purchaser, a SLC is not
necessary.
Once you agree to purchase
immovable property and sign a SLC, it is recommended to have it stamped and
deposit it with the Department of Lands and Surveys (DLS), no later than six
(6) months from the date of signing. With the deposit of the SLC, the
provisions of the Sale of Immovable Property (Specific Performance) Law
81(I)/2011 apply, which aim to protect you in case the vendor fails to meet
his contractual obligations set out in the SLC.
When purchasing an immovable property through a SLC, this should
be deposited immediately with the DLS, for the following reasons:
- By
depositing your SLC with the DLS, any future deposit of a SLC with the
DLS relating to the same unit/property, cannot be accepted.
- In
cases where the vendor refuses and/or fails to perform his contractual
obligations, you, as the purchaser, have the right to apply to the Court
for a Court Order allowing you to register the property in your name or
for compensation (right of specific performance of the Sale Contract).
- You
have the right to vest (as transferor) your rights and obligations set
out in the SLC to a third party (transferee), without the vendor's
written consent. This means that you can donate or sell your
rights/obligations as a purchaser, to another person. The "vesting
contract" is deposited at the DLS by the signing parties, i.e. the
transferor and the transferee, within six (6) months of its signing,
together with a capital gains tax clearance certificate of the
transferor, issued by the Department of Inland Revenue.
- If
you have secured a loan for the purchase of the property, you have the
right to vest to your creditor the rights arising from the SLC. In this
way, you facilitate your borrowing by encumbering the SLC for the
benefit of your creditor.
- If
you are purchasing a unit in a residential development, you obtain the
right to know the ratio (percentage) of the value of your unit to the
total value of the entire development. The vendor, after securing a
planning permit, is required to determine the ratio of the value of each
part of the development or plot under division and file it with the DLS
so that the purchaser is in advance aware of the ratio of the value of
the unit he/she is purchasing. The portion of the mortgage debt
attributable to the purchaser is determined by the ratio of the value of
each property, in relation to the total value of the entire mortgaged
property. If the property is subject to a prior mortgage, you have the
right to pay the "mortgage debt" which corresponds
proportionally to the ratio of the value of your property, directly to
the mortgage creditor, that is the financial institution, and not the
vendor. Provided that you pay the above amount and in the event that the
mortgage creditor refuses to release the property from the mortgage, then
you can proceed with an application to the Court for an Order for
specific performance, ordering the registration of the property in your
name, thus, ignoring the mortgage which pre-dates the SLC.
- The
deposit of the SLC creates an encumbrance (charge in rem) on the
property, which has a priority order in relation to other charges in
rem, according to the date of its deposit.
- If
you do not deposit the SLC with the DLS within six (6) months from the
date of its signing, then upon transfer of the property in your name,
you will be required to pay the transfer fees with an increase of ten
percent (10%).
(NG/ECHR)
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