Lien in Cyprus
A lien is a right to keep possession of goods or other property that belong to someone else, as security for money that person owes. In the Greek text of Cap. 149 and the Sale of Goods Law the right is called "δικαίωμα επίσχεσης". The Contract Law, Cap. 149, gives it to certain holders of another person's goods or property, and the Sale of Goods Law of 1994 gives it to an unpaid seller of goods.
In property law the word has a second use. Section 12 of the Immovable Property (Transfer and Mortgage) Law of 1965 defines an encumbrance on immovable property as a direct claim, lien ("δικαίωμα επιβαρύνσεως" in the Greek text) or obligation on it that exists under any law in force. A mortgage is one of the encumbrances the law lists, and section 5 of Law 81(I)/2011 makes a deposited sale contract another.
Legislation
- Contract Law, Cap. 149
- Sale of Goods Law of 1994 (Law 10(I)/1994)
- Immovable Property (Transfer and Mortgage) Law of 1965 (Law 9/1965)
- Sale of Immovable Property (Specific Performance) Law of 2011 (Law 81(I)/2011)
Types of lien in Cyprus
The Contract Law, Cap. 149, gives these rights of lien, where no contract term says otherwise:
- Bankers, factors and wharfingers may keep any goods bailed to them as security for a general balance of account (section 129)
- Anyone else may keep goods bailed to them as security for such a balance only under an express contract term (section 129)
- A bailee who, in line with the purpose of the bailment, has given a service involving labour or skill in respect of the goods may keep them until paid due remuneration for that service (section 128)
- An agent may keep any property of the principal received by the agent, movable or immovable, documents included, until paid every sum owed as commission or for expenses and services relating to it, or given an account of that sum (section 181)
Under the Sale of Goods Law of 1994, a seller is unpaid when the whole price has not been paid or tendered, or when a bill of exchange or other negotiable instrument taken as conditional payment was dishonoured or its condition otherwise failed. Subject to the rest of the law, an unpaid seller who still has the goods may keep them until the price is paid or tendered, in these cases:
- The goods were sold without any term as to credit
- The goods were sold on credit, but the term of credit has expired
- The buyer has been declared bankrupt
How is a lien discharged?
An unpaid seller's lien under the Sale of Goods Law lasts until the price is paid or tendered. Section 50 names three cases in which the seller loses it earlier: on handing the goods to a carrier or other bailee for sending to the buyer without reserving the right of disposal, when the buyer or the buyer's agent lawfully obtains possession of the goods, or by waiving the lien.
A court judgment for the price does not, by itself, end the lien. Other rules of the law can end it. One is section 54: where a document of title to the goods has been issued or lawfully transferred to a person as buyer or owner, and that person passes it, by way of sale, to someone who takes it in good faith and for value, the lien ends.
Encumbrances on property in Cyprus
For a buyer of property in Cyprus, the question is what is registered against the property at the District Lands Office of the Department of Lands and Surveys (DLS). The First Schedule to Law 9/1965 lists encumbrances and prohibitions, without limiting the general definition in section 12. They include:
- a mortgage
- the registration of a court judgment against the owner, known as a memo
- a sale contract deposited at the District Lands Office, which section 5 of Law 81(I)/2011, the Specific Performance Law, makes an encumbrance
- an interim court order, deposited at the District Lands Office, that forbids the owner to dispose of the property (a prohibition)
Under section 12, none of these is an encumbrance or prohibition until it has been notified to the District Lands Office, or a document about it declared, registered, produced or deposited there, with every formality met and the fees paid.
Effect on a sale
Section 12 of Law 9/1965 says that where a property is subject to an encumbrance, or its owner is under a prohibition, the District Lands Office accepts no declaration of transfer or mortgage of it, except as sections 29 and 31 provide. Both sections deal with a mortgage.
Section 29 lets an owner whose property is already mortgaged create a further mortgage, but only one that covers every property in the existing mortgage and no other. The new lender signs that they know of the existing mortgage and all its details.
Section 31 allows the owner to transfer mortgaged property with its mortgage, if the mortgage contract has no term against it; the new owner signs that they know of the mortgage and all its details. Where the mortgage contract forbids a transfer, the written consent of the lender and of the guarantors is required.
Deposited contracts and other encumbrances
Section 5(5) of Law 81(I)/2011 applies subsection (1) of sections 29 and 31 to a deposited sale contract as if the deposit had created a mortgage, with the necessary changes. The exception is a contract for the whole interest in the property sold, deposited before that law came into force, where the buyer has not consented. Any other encumbrance, such as a memo, and any prohibition still block the transfer under section 12, subject to other provisions.
Selling with the price deposited
Section 12A is one of those provisions. It allows the owner of property subject to an encumbrance, or to an interim court order forbidding its disposal, to sell it by a declaration of sale, depositing the whole price with the District Lands Office.
The office accepts the declaration if the price is no lower than the market value fixed by the District Court of the district where the property lies, on the owner's application served on those the encumbrance or order benefits.
A second condition is that the office has received no written notice of an appeal against that judgment. Where it has written notice of an application to review that value, it accepts no declaration of sale until the court decides the application. The deposit is paid out to the holders of the encumbrances in order of priority.
Checking a property
The DLS issues a search certificate for a property of a specific owner, with or without its encumbrances and prohibitions. The owner can apply, and so can an interested person under section 51A of Cap. 224, a term that includes someone who satisfies the Director of the DLS that they are a prospective buyer.
Once a court judgment debt is paid and the judgment satisfied, the creditor has to withdraw the memo by written notice to the DLS, on form N.58.