legal

Purchasing land or a house, or investment with respect to a property development business, is an important decision which inter alia requires the input of a properly qualified and reputable local lawyer. The British High Commission in Nicosia has a list of these, and the Customer Service Team at fraser & co on can advise and recommend.

After the division of the island in 1974, North Cyprus developed its own rules and an amended legal system has evolved.

title deeds

In relation to the purchase of land or a house, the first issue which has to be clarified is the type of title deed, called a koçan (pronounced 'kodjan'), which relates to the property. Within the North Cypriot legal system there are various types of title deeds, the differences essentially arising from past events of Cyprus. The property alternatives with different deed types are as follows:

a) British or other foreign ownership pre - 1974 title deeds. Such titles are highly sought after as they are in short supply and consequently are expensive. Purchase of such a property does not need the permission of the Council of Ministers.

b) Turkish Cypriot owned pre - 1974 title deeds (These are often referred to as Turkish Title). Non Turkish Cypriots are limited to the purchase of one donum of land each, a married couple counting as one person. Purchase of such a property requires the approval of the Council of Ministers.

c i) Exchange Title deeds (Esdeger) relating to Greek Cypriot properties owned pre - 1974. Such property was awarded on a points system to Turkish Cypriot refugees from the south in compensation for the (approximately equivalent) property they had left behind in the South of Cyprus after partition in 1974, while the deeds of the abandoned southern properties were retained by the government of the Turkish Republic of Northern Cyprus (TRNC) for use in future settlement negotiations with the south.

c ii) Title deeds relating to points-based Greek Cypriot properties (mainly land) owned pre - 1974 and awarded to Turkish Cypriots and mainland Turkish immigrants by the TRNC government.

c iii) Exchange Title deeds with no owner pre - 1974. Such agricultural land has been registered since 1974 as exchange title deed status.

Based on the 1983 TRNC Constitution, all such deeds were amended and named as TRNC Title Deeds. Such deeds are freely transferable to non-TRNC citizens, but Council of Ministers approval is required and the one donum rule applies.

d) Title deeds of pre - 1974 Greek Cypriot land and property which were awarded to servicemen or widows as a reward for services to North Cyprus. Not on points or exchange title, therefore arguably less safe.

e) Title deeds of pre - 1974 Greek Cypriot property with no exchange status, thus still owned by Greek Cypriots.

f).Title deeds of land and property which may be the subject of future transfer to the Greek Cypriot administration (e.g as designated in the Anan Plan) should there be a settlement to the Cyprus problem.

g) Title deeds relating to houses and flats on a development site , where the original land title deed is owned by the developer, while house and flat owners receive a 'lease' title deed. Such purchases require Council of Ministers approval, and the one donum regulation on houses applies.

h) Leasehold – owned by the Government (and often derelict properties) which will grant long term leases of 49 years in exchange for the lessee's renovation of the property at own expense.

If you are intending to build, you should check the construction availability (from the State Planning Office), make a land search to ascertain if there is a deed, what kind of title deed it is, and whether there is any encumbrance on it (from the Land Registry Office).

Always make and sign a contract before making any payment. Do not necessarily accept the wording of a contract presented to you - have it checked out by your lawyer and amend if necessary before signing.

once a property has been selected

After deciding on a property you wish to buy, a land search should be made and subsequently an acceptable contract should be signed with the vendor.This may include the payment of a deposit. It should be noted that according to Property Purchase (Foreigners) Law and the related regulations (Law No. 109), purchase by non-TRNC citizens is limited to one donum (which is a measure of land equivalent to 1600 square yards, 1,338 sq. meters or 14,400 sq. ft., 0.336 acre) of land (unless you form a company or constitute a trust with a local person). A permit to purchase from the Ministry of the Interior is then applied for. This is usually done by your solicitor. Make sure you receive the application number for this permit, as some solicitors are very tardy in making this essential application, thus uneccessarily lenghtening the lead time.This permission may take between six and eight months, and sometimes longer, before the Council of Ministers approves it.

Once this permit has been issued, the purchaser and the vendor are entitled to transfer ownership. The purchaser can register his/her name at the land registry as registered legal owner.The purchaser would need to be in Cyprus to sign the relevant papers on the change of ownership and of course to pay (the balance of) the purchase price to the vendor. In the case where the purchaser is not in Cyprus at the time of the transfer, a power of attorney may be issued in favour of the purchaser’s local solicitor and the property transfer may be executed in this way.

A purchase tax is applicable on all freehold property at 6% of the value of the property as assessed by the Land Registry Office, payable before the new title deed is issued, and in addition a charge of 1% of the 6% is payable to the municipality where the property is located.