ARTICLE.. Buying process nightmare

A property lawyer’s Christmas wish list

By Eleni Philippou

Over the last twelve months I have had to console weeping or irate clients, explain and justify the unjustifiable and manage unprecedented situations of “homelessness”. One might wonder if I am a social worker or psychologist, sadly I am only a property lawyer based in Paphos.

If you have bought or sold property in Paphos in the last 12 to 18 months, you will most likely understand what I am talking about. Property transactions are taking an unprecedented length of time to conclude, reaching an average of 10 to 12 months from start to completion.

There are delays every step of the way regardless of how diligent the parties in the transaction may be. I will not refer to the length of time it takes to get bank clearances for the funds to be used in any property purchase as this is perhaps the only “legitimate” delay which in my opinion can be justified. If everything else worked correctly, the banking delays could be “absorbed” without much effort.

The biggest hurdles and delays we face nowadays are mainly caused by the Paphos government offices, namely the Inland Revenue, the District Office and the Paphos Land Registry.

Just reminisce to the pre-covid era, where buying or selling a property used to take on average around three months from start to finish. The buyer paid his reservation deposit which took the property off the market usually for a reservation period of 30 days. Property due diligence searches were conducted, and contracts prepared and signed by the end of the reservation period.

The signed contract would be taken to the Inland Revenue to be stamped which was done on the spot. Thereafter, the seller applied for his tax clearances and the buyer (if not an EU citizen) would also apply for a council of ministers’ permission; both the tax clearances and the council of ministers’ permission being issued usually within two weeks from application.

The completion date, where the seller and the buyer met at the Land Registry to pay the final balance of the purchase price, transfer the title deed, and receive the keys, was any working day of the parties’ choosing (and as per the contract) provided they got to the Land Registry early in the morning and submitted their transaction documents. All paperwork being in order, the transaction would complete on the same day. Oh, for the good old days!

Currently in Paphos, to get a contract stamped by the Inland Revenue takes four to eight working days. To receive a Council of Ministers’ permission takes an average of four to six months, to get a tax clearance certificate from the Inland Revenue an average of three months. To be allowed to go to the Land Registry for completion, you must submit all paperwork to the Land Registry for “pre-examination” and then wait for the Land Registry to book you a completion appointment and this currently takes around six weeks.

These timeframes vary depending on the time of year, how many civil servants are on holiday and may have locked their office door with a pile of pending applications on their desks, etc.

In the meantime, frustrated buyers and sellers and their respective lawyers are struggling to push the paperwork from department to department, to expedite procedures and to “gain” a couple of days from one process and to move onto the next.

Buyers are desperate to move into their new homes, sellers are desperate to move onto to new pastures, containers arrive, “property chains” are created and frustration reaches the highest peaks. The property lawyer must juggle, console and justify and on the other hand cajole civil servants and meet expectations.

Clients always ask me how long the purchase or sale process will take…I used to be able to answer…I now smile rather vaguely and promise the only thing that I can promise, which is that we will do the best that we absolutely can under the circumstances.

The post-covid era leading up to the time of writing this article has been “the nightmare before Christmas” for everyone who has anything to do with the property market, starting primarily from buyers and sellers of property, lawyers, developers and estate agents.

Being a problem solver by nature, it would be impossible for me to finish this article without offering my suggestions on how the situation can improve rapidly in the short term and without asking for drastic measures like hiring more civil servants or digitalising procedures.

Starting with the examination of the Council of Ministers’ applications, which I understand are currently being processed by one person only. As there is evidently a backlog, it would be an instant boost of efficiency if at least one other person at the Paphos District Office is designated to assist in the processing of the applications until the backlog is resolved and processing times can go back to being a couple of weeks. Of course, processing times will need to be monitored to ensure that “help” arrives before things get out of hand again.

The Inland Revenue could also quite easily speed up processing times at least for stamping of contracts. This service was offered “on the spot” in pre-covid times; one had to queue up at the desk and be served when his turn arrived, made the payment, and got the contracts sealed.

During covid, a new system was initiated which theoretically should have made the process more efficient as payments are now made electronically (which means there is no need to have a civil servant to receive payment) and subsequently contracts are left in a box at the Inland Revenue for the physical seal to be placed on them, and contracts can be collected once they have been stamped.

Unfortunately, it is currently taking four to eight working days to have contracts stamped. Once again there is only one person responsible for stamping contracts and it appears that this person also deals with other matters and sometimes is asked to cease the stamping of contracts for a period, which creates a backlog.

The post-covid process for stamping contracts is an improvement in that it uses less resources at the Inland Revenue and has the potential to work very well for citizens if only the management of the department can appreciate that certain persons are in key positions and those positions must always be properly manned. This means that the person responsible for stamping contracts should not be asked to do other jobs if it means delaying the stamping process.

These are only a couple of suggestions of small changes which can have a great impact on the whole “chain” which is the property market in Paphos.

I am writing this article (evocative of letters to Santa) and secretly hoping that the next day will be one of “light” and “revelation” where someone in government will decide to make a positive change in the situation or to “fix” any small part of the distortion that we call government services in Paphos.

Source Cyprus Mail