The modern legal system of Cyprus was formed during the period of British colonial rule. And although many legislative and judicial institutions are almost indistinguishable from English ones, the country has its own case law.
There are no separate courts in Cyprus to deal with specific categories of criminal cases. Non-criminal violations are handled by the Labor Disputes Court, the Rent Control Court and the Family Court. Assize courts are subject to more serious offenses. Religious law dominates family matters and personal matters. District courts deal with civil cases and minor crimes. The highest appellate court in the country is the Supreme Court, consisting of 13 people appointed by the President of the Republic.
Despite the fact that Cyprus has a transparent judicial and legal system in all areas, the law on real estate transactions has a rather complex structure. To avoid undesirable consequences, it is necessary to have a good understanding of the features of regulation of operations. Especially when it comes to foreign investors.
Thus, in accordance with the Cyprus Constitution, the equality of all people, without exception, regardless of their nationality and without any discrimination, is proclaimed. Property rights are considered as one of the fundamental human rights. Foreign citizens owning property in Cyprus have the same rights as local residents.
Property transactions are governed by contract law. In accordance with the legislative procedure of the contract, relating to real estate, must be drawn up in writing, certified by seals and signatures and witnessed. Disputes arising from real estate transactions are dealt with in the courts of Cyprus and are governed by law. Under certain circumstances and by mutual agreement, the parties may use alternative jurisdiction or refer the matter to arbitration.
According to the current legislation, at the conclusion of a property sale transaction, you must pay stamp duty. It is calculated on the basis of the purchase price according to the following scheme:
- for the first € 170,860 — € 1.5 per thousand or part thereof;
- for the sum over € 170 860 — € 2 for each thousand or its part.
A contract without a stamp on the stamp duty in the courts and when registering the transfer of ownership in the land registry is not considered. However, the absence of a stamp cannot be considered a basis for invalidating the contract. Consideration of a contract for the conclusion of a transaction is possible only after a proper stamp has been stamped on the stamp duty and the payment of late payment interest.
This law covers all matters relating to the ownership, registration and valuation of real estate within the Cyprus Land Registry System. The land cadastre is a tool to protect transactions with property, since it traces the history of each land plot and clearly defines land rights.
The law on real estate states that the right of ownership or any other rights to real estate can be acquired only after registration in the Land Registry. Registration is done only by the owner of the property. The certificate of registration of real estate guarantees the right of ownership and is the basis for carrying out transactions with the property.
In order to prevent the unlawful transfer of real estate to another person or the imposition of a burden on it, the buyer of the property has the right to demand the enforcement of the obligation in kind by transferring a certified copy of the contract to the Land Registry.
A copy must be transferred within six months from the date of the transaction. If the seller refuses to fulfill the obligations under the transaction, the law allows the buyer to go to court to forcibly transfer ownership of real estate in his favour.
Transactions involving persons who are not citizens of Cyprus are governed by general rules. However, for foreign persons there are special rules and restrictions that allow for the control of foreign investment.
The term «foreign person» includes:
- non-resident citizens of Cyprus;
- foreign wives of citizens of Cyprus;
- EU citizens permanently residing in Cyprus or companies registered in EU countries with headquarters in Cyprus.
The law defines the term «purchase of real estate» if:
- purchase or donation of a real estate lease agreement for a period exceeding 33 years;
- purchase of shares of companies registered in the Republic or in the area of deployment of the UK Armed Forces (if the majority of the shares are owned by stateless persons in Cyprus, the company considers controlled by non-residents);
- creation of a trust fund, which includes the leased property with a lease term of at least 33 years.
Those wishing to purchase real estate, but who are not citizens of Cyprus, are required to follow a standard procedure — to obtain permission from the Council of Ministers. The permit is issued to foreigners who have honest intentions to purchase an apartment, house or a plot of no more than three donums (approximately 4000 sq. M). EU citizens can enter into transactions without the permission of the Council of Ministers. Similar rules apply to legal entities registered in EU member states.
Family members of the buyer of real estate can also enter into transactions for the acquisition of property, but only in the case of evidence of complete financial independence. The issuance of a permit may be delayed for several months; however, buyers have the right to move into a dwelling immediately.
After obtaining permission, any restrictions on property management will cease to operate. The owner gets the opportunity to sell, transfer by will or enter into other transactions with the property. Legitimate heirs should not receive permission to register property in their name. Before entering into a contract for the purchase of real estate, a check is made through the Land Registry, which allows you to make sure that there are no encumbrances and debt obligations. The procedure for obtaining permission from the Council of Ministers for the majority of third-country nationals wishing to purchase property in Cyprus is very simple and affordable. Permission is granted in working order after filing the petition.
Property rights can only be transferred after obtaining a permit. Property transfer fees are calculated based on the purchase price or current market price and are paid by the buyer.
All persons, including those who are not citizens of Cyprus, have the right to receive credit for the purchase of real estate. The pledge for lending is the property itself.
Legislative norms regulate the procedure for pledging real estate and transferring property rights to pledged property. Contracts for these transactions must be registered with the Land Registry.
In the contract law prescribed rules governing the rental of real estate. The law provides for a number of restrictions to ensure the protection of tenants’ rights in certain circumstances. The provisions of this law apply only to citizens of Cyprus and the EU.
A lease agreement concluded for a period exceeding 15 years is registered in the Land Registry. This procedure provides the tenant with certain advantages (including the right to sell the lease). Registration is carried out within three months from the date of signing the lease agreement.