Legal System
The modern legal system of Cyprus was established during British colonial rule. While many legislative and judicial institutions closely resemble those in England, Cyprus has developed its own distinct case law.
In Cyprus, there are no specialized courts for specific categories of criminal cases. Non-criminal violations are handled by the Labor Disputes Court, Rent Control Court, and Family Court, while serious offenses fall under the jurisdiction of the Assize Courts. Religious law governs family and personal matters. District courts address civil cases and minor crimes. The Supreme Court, consisting of 13 members appointed by the President of the Republic, is the highest appellate court in the country.
Despite having a transparent judicial system, Cyprus’s real estate transaction laws are complex. It is crucial for foreign investors to understand these regulations to avoid complications.
The Cyprus Constitution guarantees equality for all individuals, irrespective of nationality, and enshrines property rights as fundamental. Foreign citizens owning property in Cyprus enjoy the same rights as local residents.
Property transactions are governed by contract law. Real estate contracts must be in writing, sealed, signed, and witnessed. Disputes are handled in Cypriot courts, although arbitration can be used if both parties agree.
Upon concluding a property sale, stamp duty is required:
- For the first €170,860: €1.5 per thousand or part thereof.
- For amounts over €170,860: €2 per thousand or part thereof.
A contract without stamp duty is not recognized by courts or the land registry, although it remains valid once the stamp is applied and any late fees are paid.
The law covers ownership, registration, and valuation of real estate within the Cyprus Land Registry System, which ensures transaction security by tracking the history and rights associated with each property.
Ownership rights or other real estate rights are only acquired after registration in the Land Registry. This is done by the property owner, with a registration certificate serving as proof of ownership and the basis for future transactions.
To prevent illegal transfers or encumbrances, buyers can enforce obligations by submitting a certified contract copy to the Land Registry within six months of the transaction. If a seller defaults, buyers can seek court intervention to transfer ownership.
Foreign property transactions follow general rules but include specific restrictions to regulate foreign investment.
“Foreign person” includes:
- Non-resident Cypriot citizens.
- Foreign spouses of Cypriot citizens.
- EU citizens or companies registered in the EU with Cyprus headquarters.
“Real estate purchase” includes:
- Real estate leases exceeding 33 years.
- Purchase of company shares with majority ownership by non-Cypriots.
- Trust funds involving leased property for at least 33 years.
Non-Cypriot buyers must obtain permission from the Council of Ministers to purchase real estate. This permit is usually granted for honest intentions to buy up to three donums (approx. 4,000 sq.m). EU citizens are exempt from this requirement. Family members of the buyer may also purchase property if financially independent. Permits can take several months, but buyers can move in immediately.
Once granted, all property management restrictions are lifted. Owners can freely sell, transfer, or conduct other transactions. Legitimate heirs do not need permission to register inherited property. The Land Registry checks for encumbrances before a purchase contract is signed. Permission from the Council of Ministers is generally straightforward for third-country nationals.
Property rights transfer after obtaining a permit, with transfer fees based on the purchase or market price, paid by the buyer.
Anyone, including non-citizens, can secure credit for property purchases, using the property itself as collateral. Legislative norms regulate the mortgaging and transfer of property rights, with contracts registered at the Land Registry.
Contract law also governs real estate rentals, ensuring tenant rights under specific conditions. These protections apply to Cypriot and EU citizens. Leases over 15 years must be registered, offering tenants advantages like the right to sell the lease, with registration required within three months of signing.
