1. LEGAL ISSUES IN PROPERTY DEVELOPMENT IN CYPRUS Andrew Demetriou LL.B (Hons), Barrister at Law, FCI. Arb, Chartered Arbitrator, Partner - Ioannides Demetriou Law Offices LLC

2. Basic Characteristics of Land Law Land law in Cyprus is governed by the Immovable Property Law of Cyprus, Cap. 224, which is a piece of colonial legislation having the title A Law to Consolidate and Amend the Law relating to Tenure, Registration and Valuation and Ownership of Immovable Property and it is dated 1 st September 1946.

3. Section 2 of the Law defines immovable property as follows: (a)land; (b)buildings and other erections, structures or fixtures affixed to any land or to any building or other erection or structure; (c)trees, vines, and any other thing whatsoever planted or growing upon any land and any produce thereof before severance; (d)springs, wells, water and water rights whether held together with, or independently of, any land; (e)privileges, liberties, easements and any other rights and advantages whatsoever appertaining or reputed to appertain to any land or to any building or other erection or structure; (f)an undivided share in any property hereinbefore set out.

4. and Section 4 of the Law states that subject to certain exceptions, such as Trusts, which of course confer equitable rights, and Vakfs (Turkish- cypriot property rights) and the provisions of any Law in force for the time being, no estate, interest, rights, privilege, liberty, easement or any other advantage whatsoever in, on or over any immovable property shall subsist or shall be created, acquired or transferred except under the provisions of this Law.

5. Therefore, in Cyprus Law one can only own property as described above.

6. Land Registration Cyprus Land Registry System is unique in that all title to land is traced back to the date of the General Survey, that is to say from 4.6.1878.

7. Any right vesting in land or any right or right of way or easement vesting in land belonging to another is only recognised if it is: Derived from the owner and registered at the lands registry; Except in the case of land belonging to the Republic, if it is a right peacefully enjoyed, unchallenged for a continuous period of 30 years; Where it is derived by way of a court judgment, e.g. under the rules of specific performance; If it is derived by an edict or valid document prior to 4.6.1878; If it is an acquired right of way to an enclosed property under Section 11A of the Law; Where it is compulsorily acquired in accordance with the Compulsory Acquisition Law 1962 for a public benefit purpose; Where it is subject to a provision retained by the owner upon transfer (e.g. for rights for life to collect rents from a property, or to reside in a property).

8. Acquisition of Title Cyprus is one of the few places on earth where one can acquire registered legal title in land one day without the need for a written contract.

9. Contracts relating to land can be specifically enforced in accordance with the Sale of Immovable Property (Specific Performance) Law, Cap. 232.

10. Additionally, Section 76 of the Contract Law, Cap. 149, also provides as follows without prejudice to the specific rights conferred by Cap. 232.: (1)A contract shall be capable of being specifically enforced by the Court if- it is not a void contract under this or any other Law; and is expressed in writing; and the Court considers, having regard to all the circumstances, that the enforcement of specific performance of the contract would not be unreasonable or otherwise inequitable or impracticable. (2)Nothing herein contained shall affect the specific performance of contracts for the sale of immovable property under the provisions of the Sale of Land (Specific Performance) Law, or any amendment thereof.

11. Requirements for Specific Enforcement under Cap. 232 Section 2: (a)There must be a written contract. (b)It (or a copy of it) must be deposited at the District Lands Office in which the land is situated within two months of the date of the contract. (c)There must be a demand from the purchaser to the vendor to appear at the District Lands Office to sell the land. (d)The action must be filed within six months from the date either when the contract is concluded or the date when consideration under the contract passes from the purchaser to the vendor, whichever is the latter.

12. Further, Section 77 of the Contracts Law provides as follows with respect to contracts relating to leases of land: (1)Contracts relating to leases of immovable property for any term exceeding one year shall not be valid and enforceable unless- (a)expressed in writing; and (b)signed at the end thereof, in the presence of at least two witnesses themselves competent to contract who have subscribed their named as witnesses, by each part to be charged therewith or by a person who is himself competent to contract and who has been duly authorised to sign on behalf of such Party.

13. However There is case law in Cyprus that shows that a verbal contract for the sale of land can be enforced if it is proved, although it may not be specifically enforced.

14. Consequences of Breach of Contract Section 74 of the Contracts Law, Cap. 149, provides as follows: (1)When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the Party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the Party who has broken the contract reasonable compensation not exceeding the amount so names or, as the case may be, the penalty stipulated for. A stipulation for increased interest from the date of default may be a stipulation by way of penalty.

15. (2)When ay person enters into any bailbond, recognizance or other instrument of the same nature, or, under the provisions of any Law, or under the orders of the Government of Cyprus, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein. Provided that a person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested.

16. Vendor / Developer Issues Methods of Acquisition Either a straight sale or by way of postponed consideration (αντιπαροχή). The deposition of the Sale Agreement by the developer. The necessity for interim / co-ownership. The acquisition of planning approval. The acquisition of a building permit. The acquisition of a final building permit.

17. Conclusions Secure title for the purchaser Enforceable rights for the purchaser A vendor who parts with title may be left exposed Possibility of sub-division and issue of separate titles