The Land That Wasn't Entirely His

Guy came to me with a plot he wanted to buy, before any agreement had been signed and before a single shekel had been transferred. "I found a great plot in Cyprus. The price is right, the location is right, I want to start planning within a month." He had already agreed the terms with the seller in principle, but hadn't signed anything yet, and that's exactly the stage at which he came to me.

Before Guy signed any purchase agreement, and before he transferred a cent, as in every deal I support, I asked to receive the original ownership documents and not just what the agent had sent. Within a few days we received the official plan from the Cyprus Land Registry, and something in it didn't match what had been presented to Guy.

The land wasn't registered as full ownership. It was registered as a leasehold right.

Guy didn't understand how that was even possible. He's a seasoned developer who has built several projects in Romania and Bulgaria and knows the routine inside out: due diligence first, and only then a purchase agreement, building permits, construction, sales. In every market he knew, land was land and ownership was ownership. That confidence, by the way, wasn't a problem; in most cases it was justified. The problem is that Cyprus, even though it sounds like just another ordinary European market, has a legal institution Guy had simply never come across before. "How could I have almost closed on land like this without even knowing something was wrong?" he asked, before I had even managed to give him the full answer.

I explained the difference to Guy, because it wasn't clear to him at that moment. In Cyprus the situation is complex: a considerable share of the land in the country, especially land that originates in state ownership or religious-institutional ownership, or that was transferred in the past under long-term leases, is not sold as full ownership (freehold) but as a leasehold right for a fixed period. That period can run for decades or even longer, but it is still a time-limited right and not absolute ownership.

"So I'm not buying the land?" Guy asked, in a voice that mixed astonishment with a faint anger. "I'm renting it? And we agreed a buyer's price for that?"

I told him that was exactly the question we needed to answer before going further, and that it had no immediate answer, because it doesn't depend only on the dry legal definition of the right. It depends on what Guy actually plans to do with it.

We stopped before signing. We didn't cancel the deal; we simply didn't sign anything and didn't pay anything until we understood exactly what was on the table. I asked Guy for time to check several layers at once: what the exact lease terms are and how much of the period really remains; whether the right can be transferred to a third party without specific approval from the original landowner for each transfer; what happens at the end of the lease period, whether there's a regulated extension option, or whether the land and what's built on it go back to the original owner; and how all of this fits with what Guy really wanted to do there: build a residential project and sell units in it to Israeli investors.

That was the most sensitive point of the whole review. An Israeli investor who in the future buys an apartment from Guy in this project won't be buying a property in the sense he knows from Israel. He'll be buying a leasehold right to an apartment. And a leasehold right, unlike full ownership, may be restricted in future transfers between buyers or in inheritance, limited by the time it has left, and sometimes also harder to finance through a bank: an issue Guy can't afford to ignore if he wants to sell to individuals, most of whom need a mortgage.

It took us almost a month to get clear, well-founded answers on each of these layers. Guy didn't like the delay. "Every week that goes by, someone else is buying plots in the area," he told me more than once, and each time I felt he was seriously considering dropping the review and moving ahead.

I gave him the answer I always give at moments like this, and not only to Guy: a delay that comes from understanding isn't a delay. It's preparation. The difference between the two becomes clear only in hindsight, when the developer who waited knows exactly what he has in hand, and the developer who didn't wait finds out from his buyer.

At the end of the review, the picture became fully clear: the remaining lease period was long enough to justify the planned project; the right could be transferred to unit buyers and inherited, subject to an approval already anchored in advance in the registration; and the financing restrictions did exist in practice but were manageable, provided the sale agreements with buyers were drafted correctly from the start, with full disclosure that this is a leasehold right and not ownership, and with a mechanism that explains in plain language exactly what happens at the end of the period.

Only then, with all the answers in hand, did Guy sign the purchase agreement and transfer the first payment. He bought the land. Not because the problem disappeared; it didn't and it won't. It just became understood. He knew exactly what he was buying, what it meant for planning and for sales, and what he must disclose to every future buyer before that buyer signs. That's what made him a developer able to sell this project with peace of mind, without worrying that a buyer would discover on his own, at signing or worse, a year or two after the purchase, that he hadn't bought exactly what he thought he had bought.