A sad story for Cyprus real estate

5 mins read

Recent press reports referred to a British buyer who acquired a house from a developer, the developer claimed the buyer did not follow the payment terms and proceeded to unilaterally cancel the sale contract and sold it to another Briton.

The odd thing about this unfortunate story is that notwithstanding that the first sales contract was duly deposited at the Lands Registry, the developer sold it to a third party.

How can this be possible, since we assume that the second buyer also deposited the sales contract with the Lands office, by which it should not have accepted the second contract deposit?

If this is the case, the developer should have asked the courts for an order cancelling the first sales contract, remove the deposited contract and give him back possession of the property (in order for him to resell).

If this did not happen, we suggest that there is something wrong along the line (or that we do not know the full details).

What the press reports suggest is that the original buyer sued the developer, but he lost his case in Court and he is now appealing to the European Court of Justice, since his appeal to the High Court in Cyprus has also been rejected.

This is the worrying part, if the E.C. of Justice decides for the original buyer, there will be questions regarding the fairness/correctness of our own justice system and Land Registry procedures and we expect that several legal points will be raised on the subject.

It is a sad story for both sides, since on the one side is the original buyer and on the other the 15-year legal case that must have cost in addition to money, to both buyer and the developer, aggravation and psychological effects.

It will be interesting to read the decision of the E.C. of Justice when it comes out and it is this sort of case when published extensively, as this one has, will have negative repercussions on the Cyprus investment program, as well as the wider real estate market, both for local, foreign buyers and investors.

This is another case of delayed justice which Cyprus is plagued with and adds to its negative image.

We have pointed out that estate agents bear responsibility for wrongdoings (for items that they need to check, such as existing impediments prior to a sale, physical and legal characteristics of the property sold etc.).

But while they are required to have professional indemnity insurance (in case of wrongdoing), the developers are not required to have a certain classification (unlike the contractors) as to their capability, be it that classification will not protect the buyers.

A top-rate developer can do as much damage as a low rate one, but it will help towards the buyer’s caution/ awareness.

Of course, we are not taking sides in any legal case, but we have to be very careful as Cyprus real estate is the third-largest industry in Cyprus and this is one of the reasons why we suggest to our clients to appoint an independent advocate to examine the sales contract, carry out an investigation on the buyer’s behalf and give them independent advice.

It is also a fact that in some cases the advocates are in one way or another connected with the seller (the disadvantage of a small country) and for this reason, we suggest that advocates are asked to sign a committed statement for the buyer, that they have no connected interest with the seller.

We could adopt the Trip Advisor procedure for real estate sales (developers/agents/ advocates etc.).

It can be done, but then extreme care is needed, since if an accusation is not correct/does not stand up in court, the “accuser” may be called upon to pay damages for libel which could run into hundreds of thousands.