The serene island of Cyprus has become a popular destination for the purchase of holiday homes and investment properties. While, purchasing your first property can be an exciting experience, additional attention must be given to the procedure in order to guarantee its transparency and safeguard your interests and money.
Reservation fees or so called ‘pre-contract deposits’ are sums requested by estate agents in order to ‘reserve’ a property and temporarily take it off the market for a specified time (usually one month), even when an offer has been made. This allows for your appointed lawyer to conduct an inspection at the District Land Registry to confirm that the vendor of the property is indeed the legitimate owner of it and thus ensuring that the purchaser attains ‘good title’ of the property. This deposit is customarily at €3,000 – €10,000 of the property price and non-refundable unless the searches are not successful, where the money / deposit must be refundable.
However, who gets to hold onto that deposit and pocket it if a sale fails does not always attain a clear-cut answer.
Cyprus’ estate agents are regulated strictly by the law and must not only be professionally qualified but also registered with the Estate Agent’s Registration Council and possess professional liability insurance providing a minimum cover of CY£100,000. Once registered, estate agents can also become members of the Cyprus Real Estate Agents Association, CREAA.
However, the law has failed to deter unregistered estate agents who continue to carry out this practice, as is the case on unfortunately many occasions.
To ensure your utmost safety, such a deposit must be paid to your Cyprus lawyer in a separate client escrow account. Additionally, it is strongly advised to choose an independent lawyer to conduct all property transactions, even if an estate agent recommends one, this way you will protect your property investment ensuring you and your family can enjoy your property for generations to come.