Buying Property at Auction in Cyprus

The bid is the commitment, and it is made before anyone has advised you

Banks, credit acquiring companies and investment funds now dispose of a great deal of Cyprus residential and commercial property through online auction platforms, at reserve prices that can sit materially below the general valuations recorded at the Land Registry. For a prepared buyer that is a real opportunity.

What makes an auction different from an ordinary purchase is not the price. It is the order in which things happen. In a normal sale the buyer investigates, then negotiates, then signs. At auction the terms are fixed before the lot is listed, the pack is assembled by the seller rather than warranted to you, and the investigation has to be finished before the bid, because the fall of the hammer is the commitment. There is no stage afterwards at which a problem discovered becomes the seller's problem.

What to send us

The listing or reference number, the legal pack, and the bidding or tender deadline. If the deadline is close, say so in the first line and we will treat it as urgent. Our legal pack review is a fixed fee agreed before the work starts.

The mechanics

How the platforms actually work

Participation requires registration on the platform and identification checks. The bidder pays a refundable bidder security, scaled to the reserve price of the lot. An unsuccessful bidder has it returned in full. A bidder declared the highest undisputed bidder has it retained and converted into the initial deposit towards the price.

Immediately on conclusion of the auction a reservation agreement is signed. On most Cyprus platforms the auctioneer signs it on behalf of both the vendor and the successful bidder, under a written authorisation that every bidder grants as a condition of taking part. It is worth being clear about what that means: the auctioneer acts in a dual capacity and advises neither side.

The successful bidder then completes know your client and anti money laundering checks within a short period, usually measured in business days, signs the main agreement within a further short period, and pays the balance in cleared funds before the agreement is filed with the Department of Lands and Surveys.

Every one of those deadlines is short, and they are enforced. A buyer who is still arranging funds, or still waiting on a bank's source of funds review, is a buyer at risk of losing the deposit.

A tender differs mainly in tempo. The pack is still assembled by the seller, the terms are still fixed rather than negotiated, and acceptance still commits the buyer. A tender usually allows a little more time, which is an advantage only if it is used.

The central question

What is actually being sold

Two lots can look identical on the listing and carry entirely different risk.

A property with a separate title deed

The vendor is the registered owner, and the sale completes by an ordinary transfer of ownership at the Land Registry. This is the straightforward category. The questions are the familiar ones: what is registered against the title, what stands on the land, and what has to be cleared before the transfer.

Contractual rights sold by assignment

This category is increasingly common and it is where buyers get into difficulty. The vendor, frequently a credit acquiring company, does not own the property at all. It holds contractual rights under a contract of sale deposited at the Land Registry, and it sells those rights by way of assignment, expressly with no title guarantee.

The reason the vendor cannot simply transfer ownership is statutory. Section 7 of Law 9/1965 prohibits the transfer or mortgage of immovable property by anyone other than its owner, and until the separate titles issue the owner on the register remains the developer, or whoever has taken the developer's place. What you acquire is a position in a contract, not a registered title, and your route to a title runs through obligations owed by a third party you did not choose.

The mechanics of that route are set out in our guide to buying property without a title deed. Before bidding on an assignment lot, the question to answer is not whether the discount is attractive. It is what has to happen, and who has to co-operate, before the property can ever be registered in your name.

The searches

What the register shows, read against what the pack says

The pack is the seller's document. It is not a survey of the risk and it is not warranted. We conduct our own Land Registry search on the lot and read the two against each other, because the interesting part is usually the difference between them.

Mortgages and prior charges

A mortgage in favour of a bank is the familiar encumbrance, and on an auction lot it is frequently the reason the property is being sold. What matters is the mechanism by which it is released and the moment at which release happens relative to payment.

Memos

A memo is the registration of a judgment given against the registered owner. Section 43 of Law 9/1965 provides that a transfer of the property does not annul the proceedings, extend any period fixed by the Law, or annul, delay or postpone any sale. In plain terms, the memo follows the land. It does not stay behind with the person who incurred the judgment.

Notes and prohibitions arising from the building

A certificate of approval with notes under section 10B of Cap. 96 produces a note of irregularity, which records the finding but does not prevent a voluntary transfer. A certificate of unauthorised works under section 10C produces in addition a prohibition of voluntary transfer and encumbrance, which does stop a dealing. The distinction decides whether a lot can be transferred to you at all, and it is not always apparent from the pack.

Under section 34 of Cap. 224 a division is not registered while a prohibition stands unless the person in whose favour it operates consents. Where the lot depends on a separate title being issued out of a larger parcel, that consent sits on the critical path.

The wider sequence is set out under Property Due Diligence, and where a lot carries a note or a prohibition, under title deed problems and how to resolve them.

Consents on an assignment lot

The consents that decide whether a title can ever reach you

Where the lot is sold by assignment, the legislation names the consents that matter, and they are not the developer's consent to the assignment as such.

Section 44TH of Law 9/1965 requires either the written declaration or consent of the prior mortgagee or holder of the charge, or a court decision authorising the sale without that consent. The holders of prior charges and prohibitions are addressed under section 44IH of the same Law, and the authority in whose favour a prohibition operates under section 34 of Cap. 224.

Section 44IH also matters for a reason a bidder should understand before committing: where the sale price has been paid in full and consent is refused, a court may order that the refusal is abusive and unjustified. That is a remedy, not a formality, and it takes time and costs money. A lot whose route to title depends on obtaining it is a different proposition from a lot that does not.

Conditions and occupation

The terms you accept on the fall of the hammer

The special and general conditions of sale are the contract. They are standard forms and they are not negotiable, which makes reading them before the bid the only opportunity to act on what they say. What we look for is which obligations carry a deadline, what happens to the deposit if a deadline is missed, and where risk passes.

Vacant possession is the condition most often assumed rather than checked. A lot may be occupied by a former owner, by a tenant under a tenancy that binds a purchaser, or by someone with no right at all. Each of those produces a different route to possession and a different timetable, and recovery of possession through the courts is measured in months rather than weeks. If you are budgeting on rental income from completion, that is the assumption to test first.

Transfer fees and the tax position of the purchase also belong in the arithmetic before the bid rather than after it, because they change the real price of the lot.

After a successful bid

What follows, and on what timetable

Once you are the successful bidder the work is sequencing, and the deadlines are the seller's, not yours. The contract or the assignment has to be settled and signed. Where the purchase is by contract of sale, the contract should be deposited with the Department of Lands and Surveys under the Sale of Immovable Property (Specific Performance) Law of 2011, Law 81(I)/2011, which gives the buyer the remedy of specific performance. Section 3(1)(c) of that Law, read with section 77A of Cap. 149, requires deposit within six months of signature. That period is not discretionary and it is the single deadline we see missed most often.

Where the buyer is a national of a country outside the European Union, the acquisition requires a permit, and that process runs in parallel rather than at the end. It is explained under the Council of Ministers permit for non-EU buyers. Where you cannot travel to sign, see buying remotely by power of attorney.

Then the encumbrances have to be released against payment at the right moment, and the transfer taken into your name.

Why the opinion comes first

A recommendation you can act on, before the deadline

An auction gives a buyer one decision and a short window in which to make it. What is useful in that window is not a list of considerations but a view: bid, bid only within a stated price range, or walk away.

That is what our auction and tender legal pack review produces. It sets out what the register shows against the lot read against what the pack says, what the conditions commit you to and which of them carry a deadline, and, the part a bidder cannot do from the listing alone, what the pack does not reveal and what each gap could cost. The fee is fixed and agreed before the work starts, and where you instruct us on the purchase after a successful bid it is credited against our conveyancing fee.

The reason it has to happen before the bid is simply that afterwards there is nothing to decide. The commitment has been made, the terms are fixed, and the only question left is how to perform them.

Frequently asked questions about buying at auction in Cyprus

Is a winning bid binding?

Yes. The terms are fixed before the lot is listed and acceptance of the bid commits the buyer, with the bidder security retained and converted into the initial deposit. There is no period afterwards in which a problem found becomes the seller's problem, which is why the investigation has to be completed before the bid.

The legal pack looks complete. Why is a separate review necessary?

Because the pack is assembled by the seller, is not a survey of the risk and is not warranted. What decides whether a lot is worth bidding on is frequently what the pack leaves out. We run our own Land Registry search and read it against the pack, and tell you what the difference between them means.

What is the difference between a lot with a title deed and an assignment lot?

On a lot with a separate title the vendor is the registered owner and the sale completes by an ordinary transfer. On an assignment lot the vendor does not own the property: it holds contractual rights under a deposited contract of sale and sells those rights, expressly with no title guarantee. Section 7 of Law 9/1965 prohibits transfer by anyone other than the owner, so your route to a registered title runs through a third party.

The property is occupied. Does the auction deliver vacant possession?

Not automatically, and this is the assumption most often made without checking. A lot may be occupied by a former owner, by a tenant under a tenancy that binds a purchaser, or by someone with no right at all. Each produces a different route to possession, and recovery through the courts is measured in months.

A judgment has been registered against the current owner. Does that stay behind on the sale?

No. A memo is the registration of a judgment against the registered owner, and section 43 of Law 9/1965 provides that a transfer of the property does not annul the proceedings, extend any period fixed by the Law, or annul, delay or postpone any sale. The memo follows the land.

How quickly can you review a pack?

Tell us the bidding deadline when you send the pack and we will tell you at once whether we can meet it. Where the deadline is close, telephone rather than email. The review is a fixed fee agreed before the work starts.

Who leads this work

Between them the partners bring more than 40 years of practice in Cyprus. Every matter is run by one of them.

Andreas Kleanthous

Partner

Litigation, personal injury and insurance claims, debt recovery, administrative law, real estate, wills and probate.

Klitos Platis

Partner

Litigation, corporate and commercial matters, property and construction, including pleadings, interim applications and trial preparation.

Written on this subject

Buying Property Without a Title Deed in Cyprus

Property

Specific Performance in Cyprus

Property

All our writing is on the writing index. Related: Property and Litigation & Debt Recovery.

Before you bid, send us the listing or reference number, the legal pack and the bidding deadline, with a note of whether the lot is sold with a title deed or by assignment. Kleanthous & Platis LLC, Nicosia. Telephone +357 22 680 330, office@kleanthousplatis.com or klitos@kleanthousplatis.com.

This page is for general information only and does not constitute legal advice. Laws and their application can change, and individual circumstances differ. For advice on your own matter, contact Klitos Platis at klitos@kleanthousplatis.com or telephone +357 22 680 330.

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