Specific performance law in Cyprus

The law is the Sale of Immovable Property (Specific Performance) Law of 2011, Law 81(I)/2011. It was published in the Official Gazette on 29 April 2011, took effect three months later and repealed the Sale of Land (Specific Performance) Law, Cap. 232. Laws 32(I)/2012, 48(I)/2017, 210(I)/2020 and 132(I)/2023 amended it.

Depositing the sale contract

• Any party to the contract can deposit it at the District Lands Office of the district where the property is. The Department of Lands and Surveys accepts the deposit only if the property, or the property that includes the part being sold, is registered in the name of at least one seller, and the contract is in writing, adequately identifies the parties and the property, states the price or other consideration and is signed by all parties.
• The contract must be deposited within six months of signing. For an antiparochi contract, the landowner's six months start when the property is transferred to the developer. If no seller is registered as the owner during the six months, the contract can be deposited within six months of the date one of them is registered.
• On an application, a court can allow a late deposit, or a late claim for specific performance, for a contract that is still in force, where it finds this just and reasonable to protect the buyer.
• For a part of a jointly owned property that has no separate registration, where not all the registered owners are selling, the contract is deposited with a partition agreement signed by all the registered owners, with certified signatures. The part must fall to at least one of the sellers, who has the right to possess, use and dispose of it freely.

What the deposit does

• The deposit creates an encumbrance on the property, which ranks from the date of the deposit. Where the part sold sits in a larger property registered to the seller, the encumbrance covers the whole registered property until the part gets its own registration.
• Until the court orders specific performance or damages are paid under the law, the encumbrance secures what the buyer has paid towards the price or, for an antiparochi contract, the value of the property to be transferred under it.

The court order

A deposited contract is open to specific performance by court order, if the claim is brought within the limitation period for breach of contract.

For a written contract that was not deposited, or an oral one, the court may still make the order where it finds this just and reasonable, the rights of third parties under earlier encumbrances or prohibitions are not affected, the contract adequately identifies the parties and the property, and the property, or the property that includes the part sold, is registered in the name of at least one seller.

The court may award damages instead. Where it does, and the buyer has met the contract, the deposit works as a mortgage in the buyer's favour for the damages, from the date of the deposit.

After the court order

The person holding the order must apply to the District Lands Office within one year of the order to register the property in his or her name, and take the steps the registration needs. If not, the right to specific performance ends. On an application filed before the order expires, the court can renew it for up to a year at a time, where it finds this just and reasonable.

When the order and the documents the registration needs are presented, the District Lands Office makes the entries, whatever encumbrances or prohibitions rank after the contract. The one exception is a charge created by the court's order for the costs of a separate registration of the part sold.

Mortgages: contracts deposited before 12 December 2023

• For a contract deposited before 12 December 2023, where a mortgage was deposited first, the buyer can pay the mortgage lender, on the repayment terms of the loan, the part of the debt that relates to the property, and the lender must accept it as payment against the debt. The buyer's contract then ranks ahead of that mortgage, whether or not the whole mortgage debt is repaid.
• For a part of a larger property, that share of the debt follows the part's share of the value of the whole mortgaged property, not counting limited common property. The seller fixes these shares, based on the planning permit, and deposits them at the District Lands Office before selling any part.
• For a contract concluded or deposited before the 2011 law took effect, this route needs the written consent of the seller and the lender.

Mortgages: Form A since 12 December 2023

• Since 12 December 2023, where the only encumbrances on the property are earlier deposited mortgages or contracts and the registered owner is under no prohibition, the District Lands Office accepts the contract only with Form A or Form C.
• Form A is a written statement of each mortgage lender and the seller, which the buyer acknowledges by signing; it names an amount and the seller's bank account. In the form the law sets, the amount is 95% of the contract amount, including any advance the seller received at signing. Form C is the buyer's declaration that he or she wants to deposit the contract without Form A.
• When the buyer, or the seller where the seller received an advance, pays the Form A amount into the seller's account, the lender must accept it. On accepting it, the lender must give the buyer a payment confirmation (Form B) and release the property from the mortgage.
• The Director of Lands and Surveys may fine a lender who wilfully fails to give Form B or release the property up to €100,000, after notice by registered letter and five working days to reply.
• With Form B issued, the transfer to the buyer can be made at any District Lands Office, whatever encumbrances or prohibitions rank after the contract. If the lender does not act and the buyer presents Form B, duly signed and sealed by the lender, the Director transfers the property to the buyer on the same terms.

The seller's duties

• Before mortgaging a property under a contract the buyer has not deposited, the seller must deposit the contract, provided the buyer has met the contract up to then.
• For a contract concluded after 12 December 2023, the seller must include in it a search certificate of the property, dated within five working days of the date of signing, before or after. The Director of Lands and Surveys may fine a seller who does not up to €10,000, after notice by registered letter and five working days to reply.
• A seller who does not deposit the contract before mortgaging, or leaves out the search certificate, commits a criminal offence and, on conviction, faces up to two years in prison or a fine of up to €5,000, or both.

Assigning the contract

• A buyer can assign the contract to a third party in writing. An assignment signed before the contract is deposited, and within its six months, goes in with the contract; for a contract already deposited, a copy of the assignment goes to the District Lands Office within six months of signing it. Either way, a certificate that the capital gains tax has been settled goes with it.
• A buyer can assign the rights under a deposited contract to a lender or any other person as security for a debt. Once this security assignment is deposited, the property cannot be transferred until that deposit is withdrawn or deleted. The buyer then needs the secured party's prior consent to withdraw the contract's deposit, and the same consent to cancel or assign the contract.
• If the buyer does not meet the secured debt, the secured party can sue for specific performance. The court then orders the registration of the property in the buyer's name, with a mortgage registered on the new title at the same time.
• A clause in a contract or a security assignment made after the law took effect that forbids depositing it is void.