In recent years, we have been witnessing a growing trend of Israeli investors directing their gaze and capital towards real estate markets in the Mediterranean basin countries, primarily Cyprus and Greece. However, all too often, these investors are blinded by the attractive apartment price or the guaranteed yield presented to them by marketing companies, and forget to deeply examine the legal and tax infrastructure upon which the transaction is based (and to the extent they do check it, they do so without an experienced international firm).
When it comes to the Western world, it is generally divided into two legal systems and legal concepts - the "Common Law" versus the "Civil Law" (Continental Law). Similar to Israel, the legal system in Cyprus is largely based on the Common Law, which places a strong emphasis on contractual stability, legal precedents, and rigid protection of property and buyer rights. Similar to Israel, Cyprus also has an Ottoman history and therefore there is an organized government land registry, where the transfer of rights is done by an agreement in which the lawyers who carry out the registration in the land registry act. The concept is that a "contract must be fulfilled" strictly, and contracts are written in depth and detail many scenarios, which reduces the courts' room for interpretation. In contrast, in Greece the legal system is the Continental system, based on Roman codification - a comprehensive system of written and codified laws similar to the legal system in Germany, Italy and other European countries. The courts rely mainly on analyzing the language of the law and the civil code, and not on precedents. This may create more complex bureaucratic processes, but it provides a uniform and clear legal framework. There is a central land registry, but the transfer of real estate rights in Greece must be done through a public agreement signed before a notary (Public Deed).
In Cyprus, after signing a real estate purchase contract, the contract is deposited in the land registry of the appropriate district and the very act of its deposit creates protection for the buyer, since the seller is completely blocked from performing conflicting transactions, resale or mortgaging the property in favor of a third party, and any note/pledge/lien will be subordinate to the deposit of the agreement if registered afterwards. If the seller refuses to complete the transaction, the court can issue a specific performance order which directs the transfer of ownership in the registry even without cooperation from the seller. However, in cases of new construction, the issue is more complex since there is still no Title Deed and the issue of completing the construction must be settled. In contrast, Greece has been in recent years in the midst of a national project for the digital registration of properties, but until its full completion, there are properties (mainly outside the cities) that are still registered in the old registries requiring extremely rigorous due diligence by the lawyer regarding the chain of ownerships and the absence of historical debts/attachments. The transfer of ownership requires the involvement of a public notary, who acts on behalf of the state and checks the validity of the transaction and the taxation. The parties to the transaction convene at the notary's office to sign a notarial agreement which constitutes an act of transfer of ownership after each party has paid its taxes and met its obligations. The agreement constitutes only a contractual right and can easily be breached by the seller without significant penalties. In such cases, many buyers choose to execute a pre-notarial agreement, or a preliminary notarial agreement which anchors their right to the property before the transaction is completed and prevents the seller from backing out.
As stated, the nature of the investment in each and every place is different, and it is important that beyond a deep analysis of costs and yield and of the appropriate investment structure, there will be accompaniment by a lawyer with experience in the local culture and law (and also not to settle for only a local lawyer), while it is recommended that the accompaniment be through an international firm with a presence in Israel, which is accustomed to working in the countries where one plans to invest.