Permission to Purchase
Over the past few years, the TRNC government has worked towards reducing the time it takes for foreign buyers of property to obtain Permission to Purchase (PTP) At one time, it took over a year and longer. This resulted in a number of problems for buyers who were asked to pay for their properties but who could not take title. The solution to this was the use by lawyers acting on their behalf to use a Sale Contract which provided various guarantees and assurance in exchange for the sale proceeds. The purchaser was then allowed to reside in the home even though the title remained in the name of the vendor, pending receipt of permission to purchase and the issuing by the Registry Office of a Kocan.
The consequence of this practice has been, for many buyers of property in the TRNC, disasterous because it allowed vendors to remortgage their properties to banks and incur heavy loans and interest charges which were registered against the properties even though the buyers had moved in to them.
It is now possible to obtain a verbal confirmation that PTP has been granted within a matter of less than two months and to obtain formal permission within three months. This development now allows purchaser of property in the TRNC to buy without having to pay for the property at the time they sign a Sale Contract. It is now possible to set realistic dates for applying for PTP, conducting searches and obtaining building and land survey reports prior to completion of the sale.
With this in mind and to assist our membership the BRS Property Secretary, David Harris, has prepared a sample contract ( available in the Property section) for use in property purchases. This contract provides for the deposit to be held in trust pending completion and allows an agreed time for obtaining PTP and conducting other relevant enquiries. The agreement provides that, should issues arise within that period of time, which the vendor does not wish to remedy, the agreement can be brought to an end, the deposit returned or there can be a renegotiation of the purchase price. The agreement provides that, should the purchaser, at the expiration of this time period, wish to proceed with the purchase, the agreement is final and binding EXCEPT that the purchaser will not have to proceed if the Kocan cannot be issued. The agreement allows for the extension of time for obtaining the Kocan should its issue have been delayed.
This agreement contemplates that PTP will have been granted and a search conducted prior to completion so that there is no risk that the vendor will have registered a mortgage or taken other steps to affect the title to the property. It is only if the Kocan can be issued that the sales proceeds are paid to the vendor.
The agreement is intended as illustrative. Anyone buying land in the TRNC should consult with a solicitor and professionals to ensure that they get what they are paying for. Many Turkish Cypriots, who do not need PTP, do not use lawyers to purchase property and simply make the relevant enquiries prior to paying for the property. However, it is not unheard of that these purchasers also find that they have not made the appropriate enquiries and are left with similar problems.