Updated
GL-D-07
Glossary · Cyprus PR
Developer mortgage in Cyprus - a bank loan on the plot
A bank loan to the developer secured on the plot where your building stands
01 / In 30 seconds
The short answer
- What it is
- A bank loan to the developer secured on the plot where your building stands
- Where seen
- In the DLS search certificate, not on the title deed
- Main risk
- The buyer pays but the flat stays pledged to the developer's bank
- What to do
- Get the bank's release letter for the flat before paying
02 / In plain words
What Developer mortgage in Cyprus means
A developer mortgage is a loan a bank has given the developer, secured on the plot. Many new developments in Cyprus are financed this way, and the mortgage itself does not mean the project is bad.
The risk is elsewhere: while the mortgage sits on the plot, it also sits on your flat. If the developer fails to repay, the bank can enforce against the plot. So before paying you need a bank waiver - the bank's undertaking to release your flat from the mortgage after full payment.
The second safeguard is the specific performance law: a contract deposited with the DLS protects the buyer from new mortgages and sales. For an existing mortgage the lawyer uses forms A and B under that law or the bank letter.
A simple example
The new-build plot carries the developer's bank mortgage. The bank issues a letter: after 100% payment the flat is released. The client signs, deposits the contract and pays on schedule. At title transfer the certificate is clean.
Where developer mortgages appear
- New builds financed by a bank
- Complexes built in phases
- Off-plan purchases
- Finished buildings without separate titles
- Developer's commercial units
03 / What it covers
How the risk is covered
Checks
- DLS search certificate
- Which bank and how much
- Which plots are pledged
Bank documents
- Release letter for the flat
- Terms of release
- Forms A and B
Contract
- Developer mortgage clause
- Payment order
- Refund terms
Buyer protection
- Contract deposit
- Law 81(I)/2011
- Fresh certificate before transfer
04 / How it works
How we handle a developer mortgage
Certificate
The lawyer sees the mortgage and the bank.
Request to the bank
The developer obtains a release letter for the flat.
Contract
Mortgage terms are agreed before payment.
Deposit
The contract is filed with the DLS.
Release
After full payment the flat is clean.
05 / Key facts
What matters
01Where seen
DLS search certificate
The title does not show the mortgage. The certificate costs €10-20 and must be no older than 5 working days for a contract.
02Key document
Bank letter
The developer's bank undertakes to release the flat after full payment. Without it the buyer takes a risk.
03The law
81(I)/2011
A deposited contract protects against new mortgages and sales. For an existing mortgage - forms A and B under this law.
04For PR
Does not block applying
A developer mortgage does not stop a PR application if the contract is deposited and €300,000 is paid. But the risk to your money remains until the flat is released.
Common mistakes
Paying the developer without a bank letter
First the bank letter or forms A and B, then payment. Otherwise the flat may stay pledged.
Trusting "we will remove the mortgage later"
You need a document from the bank, not the developer's promise. The lawyer checks its wording.
Not re-checking before the title transfer
Order a new certificate before transfer: the mortgage must be gone.
06 / Expert advice
How to prepare in advance
Ask the developer early whether there is a loan on the plot and to request a release letter for your flat. Plan signing and the first payment after that.
What we do for you. We check the developer mortgage before any deposit, secure the bank letter and write the protection into the contract before your first payment.
Igor VentsHead of real estate, Title Deed and property checks
07 / Questions
Frequently asked questions
A bank loan to the developer secured on the plot where the building stands.
No, if before paying you have the bank's release letter and the contract is deposited.
In the DLS search certificate. It is not on the title deed.
The bank's undertaking to release the flat from the mortgage after full payment.
Protection from new mortgages and sales under the specific performance law.
It does not block the application if the contract is deposited and €300,000 is paid.
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