E.U. members may acquire property in shares either as land or as a share in a project, with the specific share indicating the particular unit in the project. This innovative way of selling real estate, has been adopted mainly in the Larnaca-Famagusta region, as an easy way out to by-pass the title (lack of) issue. The problems that will be met by the share ownership, as opposed to whole share title, are numerous. It is a “good” thing on the one hand to have a title (e.g.) of your villa as opposed to nothing (other than a sales contract deposited at the Lands Office), but then the seller gets most likely off the hook to proceed with the title issue. If you need any permit for your particular house on a share plot etc, it means that all the other shareholders must sign your application and if the Lands Office takes action for forced sale (e.g. at an auction) there are complications as to which house the Lands Office is to sell (this can be by-passed to an extent if a voluntary distribution is agreed upon and the agreement is deposited at the Lands Office). The share title can be mortgaged for finance etc (be it at a lower value as opposed to that with a title) and it can be sold, pass on to children etc. Bear in mind that in the event of a sale, the share owner must offer the property first to all other shareholders and for the same price, if no offers are matched then and only then the sale can proceed. What also one must watch out is that non E.U. members may not buy/have property transfer on their name in terms of share. So if in a project of say 10 units, the 9 are sold in terms of 1/10th share, the 10th unit cannot be sold as a share to a non E.U. member. It is quite legal of course to have a contract agreed and deposited at the Lands Office in the form of share, but no transfer will be allowed (if non E.U. member).

Coming now to the rental of property by local/foreign people, this is not allowed under the law, if lettings are for short periods to a single tenant i.e. lets less than 30 days per month. Although this law is not enforced and it is considered in its way out, the law as is, does not allow lettings of such a nature. Bear also in mind that lets must be so declared to the local Income Tax Office and taxed accordingly, otherwise one may find himself with two illegalities – non permitted lets and defrauding the tax. This second subject (short lets) is quite widespread and common in Cyprus (and other holiday home destinations), but it can get serious if someone is reported (let alone the local annual tax on rents – see our website on taxation issues). Short lets is one way of people paying off their mortgage and this is understood and notwithstanding the laxed local situation some countries are much more strict. In Greece for example short lets may get the landlord end up with a 2 month prison sentence (tax apart). One way around it (not fool proof) is to let the property to the developer etc (if he is accommodating) but this requires absolute trust between the two parties – not recommended otherwise. The logic behind the non-short lets is the objections that the hoteliers are raising, by arguing that it is “unfair” competition. Also there are several complains from locals/foreign residents, fore people who let their property and the tenants are not well behaved (overcrowded, all night parties, noise etc). This particular problem is evident in a noticeable extent in case of apartments where “quite” cohabitation is of paramount importance.

The last important item to watch out is the management of the common expenses since people tend to ignore payments due, for all sorts of reasons. So we do suggest that you pay particular attention to the management of the common expenses and the safeguard of the good running of a project. The administrator must have the legal authority to enforce the general agreement and collect the expenses. Leaving the management to residents, in our experience will be a disaster in most occasions. In one project that we manage, one of the residents has not paid a cent since his 3 years ago occupation, another is not paying because he has a claim against the developer (not related) and another is paying less because in his opinion this is what he should pay and no more!! With such difficulties it is not surprising that projects are not well looked after and at the end they are left to be runned down causing the residents (the buyers) damage by having a reducing value asset.

These are some of the points to be watched out from the beginning, since later on the problems cannot be met easily.

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