Failure to deposit a sale contract at the land registry

Late deposition may be permitted by a court order

If a buyer fails to deposit a sale contract they have entered into for the purchase of a property without a title deed, or when the transfer is scheduled to take place at a later time, it can be done after the expiration of the time limit of six months from the signing, provided the buyer obtains a court order allowing the deposition at the land registry. The court can allow the late deposition, without however affecting the order of priority of any encumbrances filed prior to its deposition.

When a buyer has not deposited a contract, due to negligence or ignorance, and they apply to the court for an order allowing late deposition, an application is served on the land registry, to the vendor and any other affected person, such as a mortgagee or memo beneficiary, and a copy of the sale contract and a recent search certificate issued by the land registry are attached to the supporting affidavit.

If the relevant formalities for the deposition have been complied with, the court, taking into account the circumstances and that it would be fair and reasonable to deposit the contract for the protection of the buyer, issues an order allowing the deposition, within a time specified. At the same time, it states that the order of deposition of the sale contract, regardless of the date of signing, will follow the priority of the previous encumbrances.

The District Court of Paphos in the judgment it issued in application No.257/2021, dated June 30, states the conditions for issuance of an order for late deposition of a sale contract at the land registry, the consequences of the buyer’s negligence and their rights. The court referred to the provisions of the Sale of Land (Specific Performance) Law, L.81(I)/2011 and emphasised that the applicant, who was a foreign buyer of a plot of land, neglected to file the contract of sale at the land registry. Negligence, as the court stated, is not something that can be excused, it is simply negligence. It is not rationalised by reference to factors that prevented late filing.

Furthermore, it said where there is such negligence, it would not be reasonable and fair, for the protection of the buyer, to allow the late deposition. The filing of the contract of sale is what is fair and reasonable, not the lapse of time. The latter is assumed, in order to be able to exercise this jurisdiction, regardless of the length of time that has passed.

Besides, as the court mentioned, even if there is no sale contract filed, specific performance is not excluded. The extent of the lapse of time is taken into account, not to determine whether it is fair or reasonable to allow late deposition, but as a factor connected with the possibility of differentiating the legal status of the property and the possible impact of the rights of other persons.

The court added that the purpose of depositing the contract to constitute an encumbrance is to secure the value paid by the buyer to the seller, bearing in mind that there were old prior mortgages on the disputed property which had not been removed. To date no separate registration certificate appeared to have been issued for the property being sold, to protect the buyer and not the title deed he expected to receive. It concluded that it would be fair and reasonable for the sale contract to be deposited with the land registry.

With reference to the beneficiaries of existing memos, the court held that the contract being filed was also relevant for the purposes of Law 9/65, for the submission of an application for transfer, with the status that regulates cases of stranded buyers. Whether such an application can be made under the provisions of that law, was not decided in the proceeding. Nor, of course, whether that law, as the beneficiaries of the memos claim, is unconstitutional. If the buyer attempts to make use of the sale contract that will have been filed, it can be opposed with the procedure provided by Law N.9/65.

Based on the above, the court issued the order for the late deposition of the sale contract at the land registry, which, however, will follow the priority of the previous encumbrances.

George Coucounis is a lawyer specialising in the Immovable Property Law, based in Larnaca, e-mail [email protected], www.coucounislaw.com