Filenews 16 November 2022 - by Eleftheria Paizanou
Directly to the bank and not to the seller, the buyer will pay the price of the sale of a property. In this way, the loan that the seller has to the financial institution will be repaid and the liens will be automatically deducted from the property and will be transferred without problem to the buyer, after the completion of the payment. Through the new regulation, the Ministry of Finance estimates that it will put an end to the creation of new stranded property buyers.
On the occasion of today's debate in the Parliamentary Committee on Legal Affairs of the bill that creates a mechanism to safeguard the interests of real estate buyers, protect them against the seller's obligations to banks and eliminate delays in the transfer of title deeds, the Ministry of Finance forwarded clarifications to the Parliament.
The bill, according to the competent ministry, ensures the transfer of the property for the benefit of the buyer, provided that the buyer fully fulfils his contractual obligations to the seller, based on the sales document. In the event that the bank, despite the full payment of the sale price by the buyer, does not exempt the property from the mortgage, then the director of the Land Registry Department, with a Type B certificate issued by the bank upon repayment, releases the property and transfers it free of lien.
The novelty of legislation
According to the Ministry of Finance, the great innovation of the legislation is that the sale price is paid directly to the bank account of the seller, with the agreement of all parties involved, i.e. bank, seller and buyer (Type A certificate) and that with the full payment of the sale price by the buyer, the property will be transferred free of any lien in the name of the buyer. In addition, the buyer knows, when signing the sale document, about the liens that may be borne by the property. However, there will be no retroactivity and the new regulation will apply to the acts of sale of real estate that will take place from the day of approval and publication of the legislation in the Official Gazette of the Republic. Existing property buyers will be covered by a legal framework that has been in place since 2015.
The developers don't agree
Despite the clarifications of the MIC, the Association of Land Development Entrepreneurs still has reservations and disagrees with the bill. In a memorandum to the Parliament, he argues that the bill does not protect the buyer but, as he notes, is left hanging. He warns that the Cypriot real estate market will suffer, as foreign property buyers will turn to countries in which their investment is secured from the outset. At the same time, they suggest that together with the issuance of the building permit, between the bank and the debtor (seller), the percentage that will be blocked by the mortgagee from each sale and the amount after the deduction of VAT should not exceed the share of the apartment in the land, plus 20%, to cover any unforeseen interest / expenses. They also ask that the seller be entitled to collect any balance of the price, so that he can finance the rest of the project and his operational needs.
