The key to buying safely in any country is ensuring your new property is registered correctly and comes with a ‘clean title’. We outline some of the common questions we get on this topic, all of which highlight why appointing an independent lawyer is so important!

What does ‘clean title’ actually mean?

In short, a property described as having ‘clean title’ has no ownership issues (ie the seller is correctly registered as its owner), meets all planning permission requirements and is completely free of encumbrances and financial liens, such as a mortgage (ie no third parties have a right to the property through outstanding debts secured against it). The term is used internationally and is what you want to hear as a buyer!

How do you check a property has a ‘clean title’?

In the first instance, this is the task of your independent lawyer as part of their due diligence, but in Europe, the notary signing off the transaction will do some final checks too. Three things are crucial in this process: proof of up-to-date title deeds that are registered at the Land Registry (also called Property Registry); the information recorded about the property at the Land Registry; and the information recorded about the property on the provincial Cadastral Register (if applicable).
Land Registries are invaluable. They log vital information about each registered property, including current and previous owners; details of the property, including boundaries, rights, restrictions and easements; and crucially any liens or charges registered against the property. Once instructed, your lawyer will check all the information held for the property you are buying at the Land Registry and Cadastral Register! In most countries, the Land Registry provides this information as a formal certificate (in Spain, this is known as ‘Nota Simple’), typically available online too.

What is the Cadastral Register exactly?

Most countries require every property to be registered on a Cadastral Register, which is used for taxation and administration purposes. While the Land Registry shows information regarding ownership, legal rights, restrictions and liens, a Cadastral Register records information about a property’s boundaries, size/ measurements, modifications, extensions and physical characteristics. It also includes a ‘cadastral value’, which is used for calculating local property taxes. Note, a property’s cadastral value is determined by variables set by the tax office and is not the same as the market value or price that a buyer pays for it (which is usually more). Importantly, details – including maps – on the Cadastral Register should tally with details at the Land Registry.

How do deeds get registered at the Land Registry?

Throughout Europe generally, the buyer and vendor must sign new deeds in the presence of a notary (or you can appoint your lawyer power-of-attorney to do it on your behalf) who formally authorises the transaction. This is the final part of a property purchase, ie completion in the UK (or closing in the US).
The notary or your lawyer (depending on location) must then send a copy of the signed deeds to the Land Registry, where it gets formally registered as the new title deeds and you are registered as the property’s new owner. Evidence that all required taxes relating to the property and its sale (ie transfer tax/ stamp duty tax and local council tax) are paid up-to-date must also be provided.

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What if the property I love is unregistered?

Discovering a property that is not registered at the Land Registry is never a good thing. In many countries, while registering deeds with the Land Registry is the done thing it is not a legal requirement. In days gone by, when houses passed down generations, particularly in rural communities, it wasn’t something deemed necessary.
These days, under normal circumstances it would be foolhardy to buy an unregistered property or one without up-to-date deeds. Without these, your lawyer will struggle to verify who the rightful owners are and whether the vendor has the right to sell the property, let alone if any charges are hanging over the property. In some countries, properties by law must be handed down and split between family members, which can make things especially complicated and risky when buying an unregistered property. You may end up buying a property without becoming its rightful legal owner.

I heard quite a few properties in Cyprus don’t have deeds.

This is true but with thorough due diligence and the necessary protection put in place by your lawyer, in some circumstances, it could be acceptable to buy a property without deeds there. In a nutshell, complications caused by developers not issuing individual deeds for each unit on a development failing to meet planning requirements, or simply due to delays at Cyprus’s Land Registry has meant that in recent years many new properties were never issued deeds. The situation has improved recently and solutions have been created to get around the problem, but always be guided by your lawyer.

What sort of issues could be registered against an overseas property?

Lack of planning permission or a discrepancy in what a property physically includes and what it is registered as having is common. Typically, a swimming pool or extension might not be included in the Registry plans or details, which probably means permission was never sought to build them and should be rectified (at the vendor’s expense) before committing to a purchase.
Out-of-date charges relating to an old mortgage redeemed by a previous owner can also cause delays. Banks won’t rush to get these discharged and usually, it’s left to the registered owner to push for this to be done. Getting rid of any outdated loan charges will be necessary for any new mortgage applications.
Other issues can arise with new properties that are within a development where planning requirements have not been met or licences are lacking.

You hear the term ‘title insurance’ a lot in the US. What is this?

It’s a type of indemnity cover for unforeseen claims against a property’s title. According to The National Association of Realtors (NAR), it protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as misspellings of a person’s name or an inaccurate description of the property. In some states, it is customary for the seller to purchase the policy on behalf of the buyer.
Title insurance protects either the value of the property purchase for the buyer or the value of the loan for a lender. If you buy with a mortgage in the US, your lender will require it.