As soon as a buyer pays advance payment according to the signed Sales Agreement, he/she has the right according to the Sale of Land (Specific Performance) Law No. 81(I)/2011 to deposit the Sales Agreement at the Department of Lands and Surveys (DLS) in which the property is situated within the specified time limit (6 months from the signing of the Sales Agreement). Of course before doing so he/she has to pay the necessary stamp duty fees at the Tax Office. Even thought the buyer is allowed to deposit the Sales Agreement within 6 months (without the need of a Court Order) however he/she is advised to do so immediately after signing.
Thus, 5 important reasons for the Buyer to Deposit the Contract of Sale at the DLS are:
- The deposit of the agreement guarantees that the property bought by the Buyer according to the Sales Agreement shall be finally registered in his/her name either through the transfer thereof by the vendor, or through the procedure of specific performance.
- Any delay of submitting the Sales Agreement at the LRO may create problems to the purchaser if in the meantime other encumbrances are deposited as against the object of the sale.
- The Buyer may receive a loan from the bank. Since the Buyer has not yet received the title deed on his name, with the deposit of the Agreement at the LRO he/she may apply at a financial institution to receive a loan. If the bank accepts to loan the Buyer then the rights of the purchaser deriving from the sale agreement are vested to the creditor in order to secure his/her monetary obligation against the bank.
- If a prior mortgage exists on the property still the registration of the property in the name of the purchaser will be concluded. In most cases, the property being sold is mortgaged. The purchaser has the opportunity when the object of the sale is mortgaged, to pay the amount due, under the Sale Contract, to the mortgage creditor directly and not to the vendor. When the purchaser pays that part of the mortgage debt which corresponds proportionally to the value of the property he/she has purchased as compared to the total value of the property mortgaged, the Court may issue an order for specific performance, ordering the registration of the property in the name of the purchaser free from the encumbrance. The part of the mortgage debt that is attributable to the purchaser is determined by the ratio of the value of each property under sale, in relation to the total value of the mortgaged property.
- Security of the amount paid by the purchaser, under the Sale Contract deposited.
The Law secures the amount paid by the purchaser, where the specific performance of the Contract is not possible, either due to inability on the part of the vendor to release the object of the sale from any encumbrances, or due to sale of the property for other reasons.