Registration of a trust at the land registry

An immovable property is transferred and registered in the name of the trustee

A person wishing to transfer an immovable property to a loved one or any other person, can do so through a trust deed instead of a donation. In such a case, the property is acquired and possessed exclusively under the terms of the trust. Although the beneficiary has no power to administer the property, since the person responsible is the trustee appointed by the grantor, they receive the benefits from the trust.

Through the trust deed, the grantor defines the terms, duration, any restrictions and the purposes of the trust and the beneficiary is the person for whom the property is administered. The trustee is not entitled to any remuneration, but has the right to receive any expenses or payments made to third parties and they are indemnified for any claims raised against them in their capacity as trustee. Additionally, they have no responsibility for any loss or damage to the property, except in case of fraud. For a trust relating to an immovable property to be valid, a trust deed must be made and signed by the grantor and it can be deposited at the land registry.

Immovable property can be transferred from a grantor to a trustee through a transfer declaration in accordance with the provisions of the Transfers and Mortgages Law. The question which may arise is whether the title deed issued will state the name of the trustee only or include their capacity too.

The answer was given in the judgment issued by the District Court of Limassol in an application/appeal filed by a grantor and trustee against the director of the land registry. A trust had been created regarding an immovable property and the trust deed had been deposited at the land registry. On the same day, the grantor submitted a transfer declaration for the property stating that he had agreed to transfer it to the trustee, being a company, which as beneficiary signed the declaration. The land registry officer demanded the parties add the transfer declaration that the company was acting as the trustee. The company did so although it strongly objected and later sent a letter to the director raising its objection in writing.

According to the facts of the case mentioned in the judgment, the director replied that the land registry followed its practice and expressed the worry that if a title deed states only the name of the company, then there may be confusion regarding ownership of the property, since the computerisation system does not allow the inclusion of a note that the property is possessed by the owner in their capacity as trustee.

When the title deed was issued stating the name of the company as trustee, the grantor and the trustee filed the appeal/application requesting an order of the court to annul the director’s decision and issue a title deed in the name of the company only. The appellants submitted to the court that the registration of an immovable property can only be made in the name of a person as provided in article 2 and 16 of Law 9/1965 and article 2 of the Interpretation Law regarding the meaning of the word “beneficiary” and “person”.

The court agreed with the appellants and decided the beneficiary of an immovable property in the name of whom a registration can be made and the title deed issued to may be a physical person, a company, a partnership, a union, a club, an institution or a body of persons as a legal entity or not. No registration can be made in the name of a person with reference to its capacity or any other description nor can be made in the name of the trust.

The court added that the director of the land registry ought to act as permitted by legislation, which does not allow the issue of title deeds including the capacity of the beneficiary, despite what the grantor and the beneficiary stated in the transfer declaration submitted. Even though the director’s worry was genuine, he cannot act in such a manner as to safeguard the rights of the beneficiary of a trust.

The grantor of the property entrusted the company as trustee, which bears the responsibilities the law imposes upon any trustee in relation to the administration of the property subject of the trust; the court ordered the annulment of the director’s decision, as well as the registration of the immovable property in the name of the company only.

George Coucounis is a lawyer practicing in Larnaca and the founder of GEORGE COUCOUNIS LLC, Advocates & Legal Consultants, www.coucounis.law, [email protected]