A few weeks back, I got a call from a dear friend and client of mine who was looking to buy a real estate asset in Cyprus for investment purposes. She found the property that she was interested in and she believed that she would be purchasing it from a very reputable land developer company in Cyprus.
When the proposed sale & purchase agreement was sent to us, my client noticed that the named ‘Seller’ of the Property was not the person she had been in contact with but rather an unknown to her at the time, company.
Given that one of the main reasons for choosing to purchase and invest in the particular property was that this was promoted or developed by a reputable land developer, from whom she had purchased investment properties before, the question came up of what to do.
What we did
We asked for further clarifications by the Land Developer and searched the public records for the Company (Registrar of Companies) and for the project under development (with the Land Registry). We also had to ask for further information and clarifications from the company selling the Property, for issues that didn’t’ come up in previous rounds of negotiations.
It transpired that the seller company was a partly owned subsidiary of the land developer and was incorporated for the purposes of this particular project.
We were also informed that the Company in charged with developing and constructing the said project would not undertake the management of the project post-completion but rather that a separate company would do so. This is in fact quite common. Many groups of companies engaged in real estate development choose to separate the development/construction arm of their operations from that of property management.
Faced with the above set of facts, we were able to successfully negotiate and obtain further undertakings by the largest company in this group of companies as to the due and timely execution of the Seller’s responsibilities under the sale & purchase agreement as well as the timely delivery of the property to the Purchaser and issuance of legal title.
The above highlights the importance of carefully selecting who you entrust with your investments and money but of also the importance of negotiating real estate transactions and agreements. Many surprises may, and often do come up, when the parties’ verbal understanding is written down on paper.