Law 132(I)/2023, which entered into force on 12 December 2023, amends the “Sale of Real Estate (Special Execution) Law” and introduces a mechanism designed to protect the buyer when the property is encumbered with charges such as a mortgage or a deposited contract. It enables the transfer of titles, under certain conditions, even if such encumbrances exist, provided that the buyer fulfills his contractual obligations.

The law's major innovations concentrate on three areas. First, the seller needs to include in the contract a recent search certificate identifying all registrable encumbrances. The certificate must be dated within five working days of signing; otherwise, the seller may face an administrative fine of up to €10,000. Second, the law requires the use of standard declarations (Types A, B, and C), which define the relationship between the buyer, seller, and mortgagor. Third, it regulates the payment of the purchase price into a bank account specified in Type A and grants the Director of the Land Registry the authority to transfer titles once the conditions of the declarations are met.

Type A requires the buyer to deposit a particular sum into the seller's authorized bank account, which obligates the lender to issue a payment certificate (Type B) and release the mortgage. By contrast, under Type C, the buyer proceeds without this protection and assumes greater risk. If the lender fails to comply, the Director may impose a fine of up to €100,000 and still proceed with the transfer.

The legislation does not specify a payment percentage. The generally used 95% represents market practice rather than a legal necessity.

Overall, the reform improves buyer protection and transaction security while placing additional responsibilities on sellers, banks, and lawyers, resulting in a more transparent yet demanding environment for real estate transactions which Haviaras & Philippou LLC are ready to undertake and deliver promptly.