Buying a Hotel in Cyprus: Steps Before the Deposit

Hotels in Cyprus are among the most in-demand types of commercial real estate. An operating hotel, a boutique guesthouse, or a property with restoration potential can be an excellent investment against the backdrop of the island’s growing tourist flow. However, as with any transaction, it is essential to consider legal and technical nuances before signing the very first document — the Reservation Agreement.

In this article — a step-by-step breakdown of the hotel purchase process in Cyprus from the Feod Group team: what checks must be carried out before making a deposit to ensure the legal integrity and investment reliability of the property.

Why is it important to conduct legal due diligence before paying a deposit?

In practice, it often happens that a buyer begins the legal and technical inspection only after paying the deposit and signing the reservation agreement — in an effort to reserve the property quickly. Formally, this is allowed, but as a buyer, you have the right to conduct due diligence before signing the reservation agreement. This is especially crucial when purchasing commercial property in Cyprus, where the standard deposit is around 10% of the property’s value.

A reservation agreement is not just a “letter of intent” — it is a legally binding contract. It formally confirms the buyer’s intention to purchase commercial real estate in Cyprus and pay a deposit. From this point, the seller withdraws the property from the market, and the buyer commits to completing the transaction within the agreed timeframe.

If issues are discovered after the reservation agreement is signed — such as illegal constructions, zoning mismatches, or missing licenses — recovering the deposit can be difficult, particularly if the agreement did not specify refund conditions in case of discrepancies.

Such situations don’t necessarily mean the deal must be cancelled — but they do require a clear evaluation, legal adjustments, and potentially a revision of the purchase terms.

Feod Group lawyers always recommend starting with a preliminary legal check so that the client makes decisions based on complete and reliable information, not just appearances or verbal assurances from the seller. What we recommend:

1. Legal Due Diligence of a Hotel in Cyprus

A real estate agent may help identify an attractive property and provide basic information — who is listed as the owner, what documents are available, how the property is currently used. At first glance, this may seem sufficient.

However, based on our experience with such transactions, we can confidently say: it is not. There is a list of documents that only a lawyer can properly verify — officially, through state registries and formal requests.

Legal due diligence begins with the most important aspect — who actually owns the property and whether there are any encumbrances: loans, liens, court claims. Next, the lawyer requests architectural and construction plans to determine whether everything is properly legalized. Yes, we have encountered properties with unauthorized constructions or missing licenses. While this is not necessarily a deal-breaker, such issues must be identified early to make an informed decision — whether to negotiate, adjust terms, or walk away from the deal.

Special attention is also given to land zoning. Sometimes a hotel is operating on land designated solely for residential use. These discrepancies can lead to licensing complications, issues with alterations, or even fines.

That’s why legal due diligence before paying a deposit is not a formality — it’s a critical first step that protects your investment and provides a complete and clear picture.

2. On-Site Inspection with a Professional Team

We don’t limit ourselves to paperwork alone. We always carry out an on-site inspection with a team of specialized experts: an engineer, an architect, and — if necessary — a licensed property valuer. This team approach allows us not only to visually assess the property, but also to compare its actual condition with approved plans and permits.

Our experts check:
– Whether the building matches the registered architectural and construction plans;
– Whether there are any violations of building codes or regulations;
– The technical condition of the building and its utilities;
– Whether any changes or renovations made can be legalized.

If the seller insists on receiving a deposit before the completion of all inspections, we make sure to include refund clauses in the agreement in advance — to protect the client in case any serious issues are discovered. This is a normal, professional practice, and we know exactly how to implement it correctly.

3. Financial Analysis: Cost Assessment and Return on Investment

An attractive investment property isn’t just about appearance — it’s about the numbers. It’s equally important to understand how much the hotel will actually require post-purchase. Even if the property seems affordable at first glance, it may involve:

• Major renovations,
• System upgrades (water, electricity, ventilation),
• Compliance with licensing standards.

To assess this, we conduct a comprehensive financial and legal review, which includes:

• Analysis of accounting and tax reports from previous years (if the hotel is operational),
• Calculation of potential expenses to bring the hotel up to operational standards,
• Evaluation of market occupancy, seasonality, and potential profitability,
• Creation of a financial model with a projected return-on-investment timeline.

As a result, the client gains a clear understanding of the true cost of the property and what level of income and profitability it may realistically offer.

Conclusion: Why Professional Support Matters

Buying a ready-made business in Cyprus — whether a hotel, café, or salon — requires thorough preparation.
Feod Group has been operating in Cyprus since 2007. We support transactions of any complexity and have seen a wide range of scenarios — from purchasing hotels for renovation to acquiring operational businesses with an established track record. Our experience allows us to identify risks early and offer effective solutions.

Our team includes lawyers, attorneys, accountants, architects, and auditors — everything needed for a full-scope professional evaluation of the business.

We don’t follow a template — we tailor our approach to the investor’s specific goals, from document verification and ROI calculation to transaction execution and transfer of ownership.

Looking to buy a hotel in Cyprus with full legal confidence?
Contact Feod Group — we’ll conduct a comprehensive legal review of the business, verify all documentation, and help you complete the deal safely.

Get advice from our team — simply message us or submit a request.