The following guide has been prepared by Naomi Mehmet & Partners, Advocates and Legal Advisers.

 

Under the laws of the Turkish Republic of Northern Cyprus (TRNC) non-TRNC Citizens are entitled to take title to only one property up to a maximum area of 1 donum per household.

For the purposes of this law, husband and wife count as one household.  Before the title deeds to the property can be registered in your name, you will need to have permission from the TRNC Council of Ministers. This is explained in more detail below.  If you wish to take title to more than 1 property, or a property over 1 donum in area, we can give you advice on using trustees or setting up a TRNC company to hold the title to the property for you.

The conveyancing procedure followed by Naomi Mehmet & Partners is designed to ensure that your interests are protected as far as possible throughout the whole transaction.

The first step will be an initial meeting with you to obtain information about the property you have chosen and any informal agreements you have made with the vendor regarding price, payment schedule and included items. This stage may also involve taking a power of attorney from you to ensure that we can act on your behalf to sign  documents if you are away from Northern Cyprus for long periods of time.

We will then prepare a Contract of Sale to safeguard your interests.  The Contract of Sale will include all important terms such as plot number, plot size, price, payment schedule, completion date with penalty clauses for late completion and all floor plans and specifications will be attached to the contract to ensure that the vendor is bound to carry out the construction work in accordance with these. The contract will be sent to both the vendor and the purchaser for review. When both parties are happy the contract will be signed.

New regulations since 2nd January 2008 require all Contracts of Sale for the purchase of immovable property in Northern Cyprus to be registered at the District Lands Office within 21 (twenty one) days of being signed and it is now compulsory for the Stamp Duty to be paid at the rate of 0.5% before registration can take place. Once the Contract of sale is registered the purchaser is protected against the land being sold, or mortgaged, to a third party.

The Land Registry is charging a fee for the registration at the rate of 44.50 YTL for one Title Deed and an additional 13.50 YTL for each additional Title Deed. It may be that your site has several Title Deeds. To register the Contracts the Land Registry require the original and a copy of the Contract of Sale, the site and seating plans and a copy of the Title Deed, a copy of the Stamp Duty receipt and copies of identification for the parties or where the vendor is a company, the company documents together with an application form in duplicate and the

appropriate fee

You can carry out the registration yourself at the Land Registry or you can instruct us to do this for you for which we will charge you an additional fee. If anyone, other than yourself, carries out the registration you will have to give a Power of Attorney authorising them to act on your behalf.

Further, in December 2007, the Electricity Board introduced a new regulation under which Purchasers can no longer apply for an electricity meter to be connected to their property unless they can prove that the Stamp Duty on their Contract of Sale has been paid.

 

Please request a copy of our Guide to Taxes for Property Transactions for more detailedinformation relating to taxes.

 

We will next review the title deeds on your behalf to look for evidence that the vendor is the registered freehold owner of the land and that there are no mortgages/charges, injunctions or other encumbrances on the property. We will also check that the building permission for the construction has been obtained. We will then make the application to the Council of Ministers for your permission to purchase. Whilst processing your purchase permit application, the Council of Ministers will take searches from the land registry, the military and the immigration authorities and provided that these are positive, the permission will be granted.

The permission process can take a long time to complete; the current estimation is around two years. However, this will not prevent you from moving into the property or leasing the property or possibly even selling the property – as standard practice, we always try to negotiate with the vendor the insertion of a clause into the contract allowing you to sell the property before taking title to the property. You should note that the Government of the

TRNC has made statements to the effect that all purchasers should obtain permission to purchase from the Council of Ministers before purchasing the property. There is a small risk that the permission to purchase could be refused. Therefore, to protect purchasers, the Government advises that permission to purchase should be obtained before any monies are paid by the purchaser. However, due to the length of time permissions are taking to be processed, purchasers find that following this advice is not practical. It is virtually impossible to find a vendor who is willing to wait for a purchaser to obtain purchase permission before concluding the sale. Purchasers who proceed on this basis must therefore accept that there is a risk attached to purchasing without obtaining permission from the Council of Ministers first and there is a small possibility that the permission to purchase could be refused. You can reduce this risk by ensuring that the property you wish to purchase is not in close proximity to any military bases and you should be aware that you will need to prove to the Council of Ministers that you have no previous criminal convictions. In the event that your application for permission is refused, you can nominate any other person to take title to the property on your behalf and hold the property on trust for you. We can assist you with the drafting of the necessary trust deeds. If you wish, we can also try to negotiate with the vendor to insert a term into the Contract stating that in the event that the purchase permit is refused, the vendor will

refund the purchase price to you.

Once your purchase permission has been granted, we will notify you and then fill out all of the necessary land registry valuation forms for the valuation of the property. The taxes due on transfer of title will be paid and the title deeds will be registered in your name (please refer to our Guide to Taxes for further information on taxes). If you have left us with power of attorney, all of this can be dealt with without you being required to travel to the TRNC. We will then collect and keep the title deeds for you until you are ready to collect them.

 

I am not a citizen of the TRNC, but I want to purchase two properties in the TRNC? How can I do this?

You can sign the contract of sale for the two properties in your own name; however, you can only apply for purchase permission for and take title to one property. Therefore, you will need to find a nominee (this person should be a friend or relative or someone you know and trust) to take title to the property and hold the property on trust for you or you will need to set up a TRNC company. Please ask us for more detailed advice on trusts and companies.

 

No. Husband and wife are counted as one household and the current property restrictions are one property per household.

 

This process can take some time - current estimations are around two years. The process involves searches being taken from the Land Registry, the Immigration and the Military.

 

No. Once your property is complete, you will be able to take possession of your property and move in. However, see our notes above on the advice of the Council of Ministers and associated risks.

 

This depends on the terms of your contract of sale. As standard practice at Naomi Mehmet & Partners, we always try to negotiate with the vendor to insert a clause allowing you to sell the property before taking title. We would then simply prepare an assignment of contract to be signed between you, the vendor and the new purchasers assigning all of your rights and obligations under the contract to the new purchasers.

 

Taxes, apart from stamp duty which is payable within 21 days of the date of the Contract, are usually payable right at the end of the transaction after your purchase permit has been granted and the title deeds are being transferred into your name. However, some vendors require VAT to be paid on the sale price at the date of delivery of possession of the property. Please refer to our Guide to Taxes for more details on this subject. The rates of tax are as follows:

• Land Registry Transfer Fee - 6%. However, every person has a once in a lifetime exemption to reduce this tax to 3%. If you decide to use your option right, you will pay 3%.

• VAT – 5%

• Stamp Duty – 0.5%