FAQ
With the experience which we have built up over the years and the fact that we have become very well acquainted with all of our clients to date, we are able to predict the kind of questions which will often pop up in our clients minds. These questions may range from laws regarding criminal issues, to current laws surrounding issues such as property purchase procedures, or simply a general interest in North Cyprus Laws especially if the client has a vested interest on the island such as an early retirement and would just simply like to get to know the island a little better. Therefore for all the reasons mentioned above we have compiled the following frequently asked questions and answers section which we aim to update regularly and hope will give you a simple and straight forward answer to your questions. We would welcome any feedback from you with other areas which you may like us to cover in this section.
Q. What do we need to be careful of when deciding to buy a property in the TRNC?
A. There are 4 steps to be followed
Step 1 – Ask the vendor to see the original title deed (kocan) of the property/land, and take this to your lawyer.
Step 2 – Your lawyer will then obtain a site plan for the property/land in which an application will be made on your behalf for a search to be completed on the property/land.
In some cases these might already be available from the vendor. If so then all you need to do is show these to your lawyer.
The site plan is a map showing the exact location of the property/land you intend to buy. The location on this site plan should coincide with the information given on the title deed, therefore ensuring that you are buying what you have been shown.
The search which needs to be obtained will prove the identity of the last owner of the property/land. This will not only prove the last owner but will also show whether the property/land is free of any charges and/or encumbrances.
This procedure can take between 5-7 days to be obtained.
It is important that these procedures are completed before the signing of any contracts. If it is not possible for you to return in time for when your lawyer gives you the go ahead to sign, you can provide your lawyer with a power of attorney to complete this on your behalf.
If the property/land is owned by a Company then your lawyer should ask to see the Company registration details and/or board of directors resolution to ensure that the vendor can sign the contract on behalf of the company and has the authorisation to sell.
Step 3 – Your lawyer will need to check with the site planning office to ensure that there are no restrictions about construction on the land.
Step 4 – Once all the above is completed and your lawyer has advised and given you the all clear to go ahead with the property purchase then you need to sign a contract with the vendor.
Q. Is there a limit as to how much we can purchase as foreign citizens?
A. As a rule, foreign individuals (those who are not registered citizens) may not transfer the title deed of more than one property at any given time e.g more than one apartment or more than one villa or land in Northern Cyprus larger than 1 Donum in size. Recently the current law governing this issue has changed slightly in the respect that now a foreign individual can transfer the title deed of a completed property which is built within up to 5 donums of land.
Q. How many types of Title Deeds exist in the TRNC? And what are the differences between them?
A. Due to the division of Cyprus in 1974, different types of deeds have come into existence, and it is important that you are aware of the type which you purchase. The first of these is Turkish title deeds. This means that the property/land was Turkish Cypriot owned pre-1974. This type of title deed carries no risk to the purchaser.
The second is “Es Deger”- meaning of equal value. This type of title deed was Greek owned pre-1974, after the war however they abandoned their land and fled to the South, as did the Turkish Cypriots from the South to the North. Therefore this land was then given to Turkish Cypriots in return for land which they left behind in South Cyprus. This kind of deed may possibly carry a certain risk in the way of compensation. At this stage however it is unclear as to who will pay this compensation, the government or individual people.
The Third of these title deeds is TMD Land. TMD land at the time (After the war) were unoccupied lands which were only used as agricultural lands. These lands were used as a government incentive to increase the population in the TRNC by allocating lands to mainland Turkish citizens for agricultural and farming purposes. In recent years the law changed enabling persons to be able to take ownership of the land and to settle in the TRNC. This kind of title deed may also possibly carry the risk of compensation (only if construction has begun on the land).
Q. What are the Taxes / Vat for which I will be liable to pay when taking possession of title deeds?
A. A stamped Contract of Sale needs to be submitted to the Land Registry Office and the valuation will be assessed on the purchase price as stipulated in the Contract of Sale. However the Land Registry Office reserves the right to conduct their own valuation upon the property in question if they are not content that the Contract of Sale submitted reflects the true market value of the Property. VAT will be payable at a rate of 5%, which is payable upon possession of the property. You will also need to pay the transfer tax which is payable upon the transfer of the title deed into the individuals name, which is normally 6% but can be reduced to 3% as a once in a lifetime opportunity. (Please note that these rates may possibly change in the future, and you should always check at time of signing a contract.)
Q. What aspects do we need to be careful of when signing a sales contract?
A. It is a good idea to have your lawyer present when signing.
Firstly ensure that the date of signing is included somewhere in the contract. Without this the contract is not complete.
It is important that you read the contract carefully, to ensure that everything which you have agreed with the Vendor is included in the contract and that anything which you have not is not included.
If there are any aspects of the contract which you do not understand you should always ask for these to be explained.
Ensure that the person signing your contract is eligible to do so, in that they are either a director of the company whom you are buying from, or they have authorisation to sell, by asking to see documentation proving this, e.g. company registration details and/or a board of directors resolution.
Every page of the contract, including appendix’s needs to be initialled by both parties signing and then the final page signed.
Two witnesses should be present when the signing takes place, and they need to sign the contract as witnesses.
Do not sign until you are 100% happy with the contract as a whole.
Q. Why is it necessary to have a Sales contract stamped by the financial office (office which is a part of the Ministry of finance)?
A. The purpose of having a sales contract stamped is not to make it valid however in the event that a dispute arises between yourselves and the opposite party and the contract needs to be used in court as evidence, then it can only be done so if the contract has been stamped. Also in order to successfully register the Contract at the Land Registry Office it is a requirement that the Contract of Sale is duly stamped.
To have a contract stamped within one month of signing, the cost is valued at 0.5% of the sales price as stipulated in the sales Contract. However anytime after this the cost will increase and a late penalty fee will be added.
Therefore it is in your best interest to arrange to have the Contract stamped soon after the signing, it also ties in with the 21 day limitation to register the Contract once signed.
Q. If the Vendor does not fulfil any or part of his responsibilities as stated in the sales contract, what action can be taken?
A. At such a time you have the right to terminate the contract and to seek compensation, depending on the clauses which have been included in your contract with regards to this. If however no such clauses have been included then you are still entitled to claim back all the money which you have paid to the Vendor up until that time and this will require court action, in some circumstances we may urge you to consider taking an injunction proceeding against the Vendor. You can also claim back any other damages and expenses which you have incurred as a result of the vendors actions.
Q. In the event that any problems arise relating to the sales contract which we have signed, what are the procedures and which courts will deal with such disputes?
A. First of all you need to sign a retainer and Power of Attorney giving a local lawyer consent to file a case with the TRNC courts and to act on your behalf.
The court that will process your case will be determined by whichever district your property is registered under. In some cases the district of the court may already be assigned in your signed Contract of Sale.
Q. Can we sell our sales contract onto a third person when we so wish?
A. If you have made full payment for the purchase of your property to the vendor then the vendor should have no objection to you selling on your contractual rights to the property but this clause should be covered within your Contract of Sale to safeguard your interests in this matter.
Q. What is the procedure for foreign citizens to acquire permission from the Ministry of Interiors to take possession of TRNC Title deeds? How long does this procedure take?
A. This is a process that would normally be included in the Legal fee at the beginning of the Conveyancing process. Your lawyer will submit a form with your personal details on, a CRB check to be provided by yourself, a copy of the title deeds relevant to your purchase, copy of site plan and a photocopy of your passport to the Interior Ministry.
Once these have been submitted your lawyer will be given a reference number for this application. This number is needed in order to make any future enquiries in relation to this application.
In considering your application the Interior Ministry will take into account the following; whether your property purchase is within the specified land requirements and whether or not it is near any forbidden military zones.
It can take approximately one and a half years for the results of this application to be released to your lawyer.
**If you have any further queries please do not hesitate to contact us via email or phone.
