Reservation deposit in Cyprus

The buyer and the seller agree the amount between them, so it differs from one property to the next.

If the buyer withdraws, the starting point is what the reservation agreement says about the deposit. The Contract Law, Cap. 149, has a general rule for any contract that names a sum to be paid on breach or has a penalty clause.

Where a contract names a sum to be paid if it is broken, or contains a penalty clause, and one party breaks it, section 74 of the Contract Law, Cap. 149, entitles the other party to reasonable compensation from the party in breach, not exceeding the sum named or the penalty, whether or not actual damage or loss is proved.

The contract of sale

Once a contract of sale of a property is signed, section 77A of the Contract Law requires the buyer, subject to the other requirements of that law and of any other relevant law, to deposit a true copy of it at the competent District Lands Office within six months of the date the parties sign it. If the buyer does not, the buyer's transfer fees go up by 10%.

Where no transfer fees, or reduced fees, are charged under sections 7 and 10 of the Department of Lands and Surveys (Fees and Charges) Law, Cap. 219, the 10% is charged on the fees that would apply under that law as if the exemption or exception did not apply. Section 77A applies only to contracts of sale signed after the Contract (Amendment) Law of 2013 came into force.

Specific performance

Under the Sale of Immovable Property (Specific Performance) Law, Law 81(I)/2011, a contract deposited under that law is open to specific performance by court order, if the claim is brought within the limitation period for breach of contract. The court can award damages instead, where it thinks fit.

For a written contract that was not deposited, or an oral one, the court may order specific performance if it finds this just and reasonable and further conditions in the law are met. The specific performance law page sets out the conditions.