On the 12th of December 2023, Law 132(I) of 2023 was published, amending the Sale of Immovable Property (Specific Performance) Law of 2011 (Law 81(I)/2011). The new Law amends the provisions regarding the submission of a contract for the sale of a property to the Department of Lands and Surveys and regarding the specific performance of a contract of sale.
The amending Law aims to provide proactively protection to the rights and interests of purchasers of Immovable Property, in cases where the immovable property happens to be already encumbered by a mortgage. The main change introduced by the Law 132(I)/2023 is related to the requirements that must be met for the filing of a contract to the District Land Office, in cases where the contract concerns immovable property which is already encumbered by a mortgage.
In addition to the existing requirements that have to be met for the lodging of a contract to the District Land Office to be accepted , under the new provisions it is specified that the submission of a contract will be accepted only if it is accompanied by the written declaration of the mortgagee and seller, in relation to which the purchaser confirms knowledge of the mortgage (Form A of the Annex of the Law), or the written declaration of the purchaser (Form C of the Annex of the Law) about the existence of a mortgage.
Form A clarifies that upon payment of the 95% of the contract amount and issuance of the Form B, the existing mortgage will be lifted. In case of failure of the Mortgagee to discharge the mortgage, the purchaser shall have the ability to submit Form B to the District Land Office, duly signed and stamped by the Mortgagee. Then, the Director of Department of Lands and Surveys shall proceed and transfer the property into the name of the Purchaser.
The main goal of the above introductions is to safeguard the interests of the purchaser. The procedure arising from Forms A and B ensures that the property will be transferred freely to the purchaser, once the purchaser has fulfilled its obligations to the seller.
Alternatively, the Amending Law of 2023 allows the submission of contract by using Form C. Βy completing form C, the purchaser acknowledges the existence of a mortgage affecting the property and assures that it wishes to proceed to the lodging of the contract without the completion of Form A and Form B.
Form C does not safeguard the purchaser's right to the same extent as Form A. However, it contributes to the advance protection of the purchaser because the purchaser becomes aware of the existing mortgage and also confirms his willingness to proceed with the filing of the agreement to the District Land Office.
The addition of Forms A, B and C is a positive development for the real estate market, since through this new practice the purchaser will be better informed and his interests will be safeguarded and protected towards a seller who may potentially be unable to transfer the immovable property into the purchaser's name due to the existence of a mortgage.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
