Understanding conflict of interest in Cyprus real estate transactions

Cyprus is home to one of the most active real estate markets in the Mediterranean. From luxury seaside villas and modern urban apartments to traditional stone houses in charming villages, the island’s property scene attracts thousands of transactions every year.

The real estate sector plays a significant role in Cyprus’s economy, directly contributing to growth, employment and the country’s international image as an investment destination. Sale and purchase agreements are being signed daily, involving both local and foreign buyers and the pace of activity shows no sign of slowing down.

To reach completion, each transaction brings together multiple parties: the buyer and seller, real estate agents, lawyers, banks, surveyors and government departments, such as the Land Registry and Tax Office. Every link in this chain matters, but perhaps none more so than the role of the lawyer.

The lawyer’s role in a sale and purchase agreement in Cyprus is central to ensuring that the transaction is legally sound and the client’s interests are protected. A competent lawyer will conduct due diligence on the property, review and draft the engagement letter, the sale agreement, ensure compliance with Cyprus law, safeguard the deposit, handle applications to relevant authorities and guide the client through every legal requirement until title transfer.

They act as the safeguard against future disputes or unforeseen liabilities. When this role is performed well, it gives the client confidence and security. When it is not, the consequences can be serious: unresolved debts attached to the property, incomplete or invalid contracts, delays in title transfer or even complete loss of funds.

Given the importance of this work, it is worth examining a practice that, while legal under certain conditions, raises serious questions: a single lawyer acting for both the buyer and the seller. The Cyprus Code of Conduct for lawyers makes it clear that a lawyer’s duty is to represent their client’s interests to the best of their abilities. But can a lawyer truly protect both sides at the same time?

The interests of a buyer and seller are, by nature, different. The buyer seeks to pay a fair price, ensure the property is free of encumbrances and secure maximum legal protection in the contract. The seller aims to receive payment promptly, limit liability and close the deal under terms favourable to them.

In the middle stands the lawyer and if representing both parties, they must navigate between two potentially opposing objectives. A lawyer lacking the necessary skill or ethical approach can mishandle such a situation, leaving one or both clients dissatisfied or even harmed.

Cyprus law allows the conflict of interest to be waived if both parties are informed in advance and agree to proceed with the same lawyer. That agreement, however, must be based on truly informed consent. For a first-time or foreign buyer, this point is crucial.

Situations where this arises often involve a foreign buyer dealing with a local seller or developer who recommends “their” lawyer. Sometimes, the buyer is not told that the same lawyer is acting for both sides or is given little choice by the real estate agent.

In other cases, the buyer may be told but not fully understand the implications. A foreign buyer, unfamiliar with local laws and practices, may assume that the recommendation is made purely for convenience, without realising the potential risks.

The risk is simple: by relying on a lawyer, you did not choose yourself, you may end up with legal representation that does not meet your expectations or requirements. If issues arise, the cost of rectifying mistakes, both financial and emotional, can far exceed what you hoped to save by taking the recommendation.

It is therefore essential that buyers take an active role in selecting their legal representation. Ask the seller or agent directly: who will be the lawyer? Will they be representing both sides? Is there a conflict of interest? If the answer is yes, consider whether you are truly comfortable waiving that conflict.

Choosing the right lawyer should be a deliberate process. Look for someone experienced in property law under Cyprus jurisdiction, ideally with a track record in transactions involving foreign clients. Ensure they communicate clearly in a language you understand, provide transparent fees and demonstrate an ability to act independently of the seller or agent. Ask for references, check professional memberships and verify that they are registered with the Cyprus Bar Association.

Ultimately, the sale or purchase of property in Cyprus can be a positive, rewarding experience, but only if approached with care. For foreign buyers especially, awareness is the key. Be informed, be cautious and ask questions until you are fully satisfied.

The lawyer you choose is not just a facilitator; they are your legal shield. Make sure it is one you have selected based on trust, competence and independence. In a market as dynamic as Cyprus, protecting your interests is not just a legal formality but it is the foundation for peace of mind long after the keys are in your hand.

Konstantinos Kaousliades is a lawyer at Elias Neocleous & Co LLC

Disclaimer

The content of this article is valid as of the date of its first publication. This publication has been prepared only as a general guide and for information purposes. It does not constitute or should not be read as legal advice. One must not rely on it without receiving independent advice based on the particular facts of his/her own case. No responsibility can be accepted by the authors or the publishers for any loss occasioned by acting or refraining from acting on the basis of this publication