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Purchasing Immovable Property in the Republic of Cyprus: The Importance of the Certificate of Approval

CATEGORY: PROPERTY – REAL ESTATE

Purchasing Immovable Property in the Republic of Cyprus: The Importance of the Certificate of Approval

A title deed (or certificate of registration of immovable property) is an official document issued by the Department of Lands and Surveys, evidencing ownership of the legal title in an immovable property in the Republic of Cyprus. The title deed contains a description of the property in question, including, among others, its registration number, details of the registered holder and of his share in the property, as well as any notes or remarks relating to the existence of any encumbrances, charges, or rights of third parties burdening the said property.

Usually, the title deed reflects the current state of the immovable property, however, it is conceivable that, following some form of development which occurred after the issuance of the original title deed, the property has acquired certain characteristics which render it substantially different from its previous state. That would be the case where, for example, the owner of a plot of land decides to construct a residential unit within the said plot. The intended development would clearly alter the status of the property from a ‘plot’ to a ‘residence’. In such a case, the title deed originally issued would no longer reflect the status of the property. In order to proceed with the construction of any building within the plot, the owner would be expected to apply to the competent authorities for the issuance of a planning and building permit.

Provided that abovementioned planning and building permits have been issued and that the construction of the building is completed in accordance with the terms of the said permits, a certificate of approval is issued by the competent town planning authority following a relevant application to this end by the owner of the immovable property. A certificate of final approval attests to the compliance of a recently completed building or construction with the terms of the approved planning and building permits that have been issued in relation to a proposed development within the immovable property in question; it serves as a confirmation that there are no material derogations, inconsistencies or disparities between the information provided to the competent authorities with regards to the manner of construction of the buildings (by reference to the architectural plans that have been submitted in the context of the application for the issuance of a planning and building permit) and the manner in which the buildings were actually constructed. In this respect, it is worth mentioning that the issuance of a certificate of approval is a prerequisite for the issuance (or update) of a title deed relating a particular immovable property within which any building or construction has been erected.

The certificate of approval assumes particular importance where the purchase in question relates to immovable property consisting of a house or apartment comprising part of a larger building complex to be constructed, or which has only recently been constructed, and in respect of which a title deed has not yet been issued by the Department of Lands and Surveys. To take an example, let us assume that ABC Constructions Ltd, a land development company, proceeds with the purchase of a plot of land for commercial exploitation purposes. At the time of the purchase of the plot by ABC Constructions Ltd, the description contained in the title deed refers to a plot of land. Let us now assume that ABC Constructions Ltd has decided to proceed with the construction of a building project within the plot, which shall comprise of a block of flats each consisting of several apartments for residential use. Following the issuance of the relevant planning and building permits relating to the building project, ABC Constructions Ltd begins to advertise the properties for sale. John decides to proceed with the purchase of one such flat and enters into a sale agreement with ABC Constructions Ltd to this end.

At the time the sale agreement between John and ABC Constructions Ltd is signed, there is no title deed with regards to the property purchased by John. In this respect, pursuant to the terms of the sale agreement, ABC Constructions Ltd assumes an obligation towards John to arrange for the issuance of a certificate of final approval upon completion of the property and the issuance of a separate title deed in respect of the property shortly thereafter. To this end, following the construction of the project and the submission of an application to the town planning authority for the issuance of a certificate of approval by ABC Constrictions Ltd, an inspection shall be carried out at the plot by the competent town planning authority to ascertain that the construction of the project adheres to the terms of the planning and building permits and the approved architectural plans.

A certificate of approval may be issued without any notes, indicating that the construction of the building corresponds to the terms of the approved architectural plans and permits. At the same time, it is possible that following the inspection, the competent town planning authority is of the opinion that whilst the construction generally adheres to the terms of the planning and building permits, it also contains certain insignificant or inconsequential discrepancies. In such a case, a certificate of approval with notes shall be issued, stating the discrepancies in question and requiring that these be rectified within a prescribed timeframe. In the event, however, that the competent town planning authority is of the opinion that the construction is not in conformity with the terms of the approved architectural plans and planning and building permits, it may proceed to issue a certificate of non-authorised works, in which case, the owner’s right to dispose or mortgage the property shall be restricted.  

From the perspective of an interested purchaser, it is therefore essential -in the absence of an updated or new title deed- to ask the seller to provide, among other documents, copies of the approved architectural plans and building and planning permits relating to the development in question. Assuming that the property comprising the subject-matter of the sale agreement is not completed at the time the sale agreement shall be signed, it is imperative for the agreement to contain a clause imposing on the seller the obligation to procure, within reasonable time following the completion of the property, the issuance of a certificate of approval and the issuance of a separate, new or updated title deed, as the case may be, with regards to the immovable property comprising the subject-matter of the sale agreement. On the other hand, when the subject-matter of the contact concerns the purchase of a property which is already constructed and in respect of which the title deed has not yet been issued, the purchaser should always ask the seller to provide the certificate of approval to make sure that there are no discrepancies pertaining to the construction of the building.

Author: MARIOS CHRISTODOULOU

 

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