It’s not a seller’s market

2 mins read

Submitting a sales contract to the Land Registry Office is a form of protection to the buyer, regardless of if a property has or not a separate title.

This measure can be used through a court decision to force the seller to transfer the property to the purchaser’s name (provided the purchaser abides by the sales contract terms).

However, the same proviso does not exist for the seller’s benefit in a way that the buyer can be forced by the court to transfer the property back to his name.

During these challenging times with limited funding, this non-protection of the seller has become a serious problem.

Some buyers do not have the funds to pay the required transfer fees, others do not bother, and others vanish (usually foreign buyers).

Based on my own experience, I would like to provide examples of this state of affairs.

Paphos – A project under our management comprises 31 apartments; only 21 buyers came forward for the transfer, notwithstanding its 2-year prior issue of the titles and the numerous invitations to proceed with the transfer.

Limassol – Out of 85 apartments in a project, only 29 came forward for transfer after years of delays in the title issue.

So, based on my experience, approximately 30% of the total number of buyers do not proceed with the transfer.

This unhealthy situation is not acceptable, and the Government/parliament should look into it because:

  • If a property is not transferred to the buyer, the title remains in the name of the seller/developer; the latter is then responsible for the payment of the property and any municipal taxes, whereas the Tax Authorities may place a ‘memo’ on the seller’s properties until such taxes are paid, including interest on the delay, without this being their fault.
  • The disappearance/non-response of buyers, with their contract deposited at the Land Registry Office, prevents the seller from cancelling the sales contract to resell the property. Whereas in most cases, where the seller offered a commercial bank guarantee, it is another issue since, in such cases, a long legal battle is required to secure the return of the property to the seller, which could reach 2-3 years and with added cost by the seller of €3,000-5,000.
  • Even if the seller successfully cancels the contract, if the buyer has leased the property to third parties, the seller is stuck with a lease contract restricting the sale to third parties.
  • It is normal for the seller to offer a bank guarantee to secure the buyer, but these guarantees are lifted only when the property is actually transferred to the buyer’s name. How is this possible if the buyer does not present for the transfer?

The whole matter is quite unfair for the seller since the deposit of a sales contract protects only the buyer, leaving the seller exposed.

Recently, a new provision was introduced in the law, stating that the seller can force the buyer to present themselves for transfer. Still, if not, then the seller should force a transfer but pay the buyer’s transfer fees, any taxes, and capital gains and then the seller to sue the buyer again to collect.

It’s fair to say that some developers do not behave correctly, but we gave you examples that buyers are not innocent angels.

Real Estate Valuer, Estate Agent & Property Consultant