First, let me say that we are sorry to hear that you are also suffering at the hands of an unscrupulous property developer. Would you consider registering your problem on our website at www.cyprus-property-action-group.net? We know it’s of little comfort to you, but you’re not alone. More than 2,000 people, both Cypriots and foreigners, have already registered with us.
On the issue of Title Deeds, we were encouraged to read that the Government’s Lands and Surveys Department is looking at ways of improving consumer protection. This is probably the most important issue facing both Cypriot and non-Cypriot property buyers.
Some buyers run the risk that they will never own the property they bought. Even though they may have paid for it in full, their property is sometimes burdened by an unpaid mortgage taken out by the developer many years previously to help finance the original construction work.
In the past, some may have viewed this risk as being small; but things have changed. The current turmoil in world banking, the ensuing credit crunch and the real threat of property bubbles, only increase the possibility of loan default; buyers in some parts of the world are already losing their homes as a consequence.
This problem is exacerbated in Cyprus where ‘Klondike fever’ has gripped the island. With no Government regulations holding them back, experience or financial standing, people are, in the words of Antonis Loizou, “waiting to get on this golden bandwagon of easy income”. These ‘entrepreneurs’ can be anyone from a taxi driver to the owner of a local taverna. In a case reported in the media a couple of years ago, it transpired that the ‘property developer’ was actually a barman employed at an army camp. Needless to say when he went bankrupt, the buyers lost their money. What experience did he have, apart from mixing brandy sours?
We have no problem with property developers risking their money on their developments. But the practice of offloading their risk in the form of an unpaid mortgage onto unsuspecting property buyers is totally unacceptable!
As a buyer, the disadvantages of not having Title Deeds are significant:
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They do not own the property and are therefore unable to enjoy the full benefits of property ownership; including the right to sell or transfer it to anyone they wish without reference to its Title Deed holder.
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If they wish to sell the property, they need to cancel or transfer their contract of sale at the Land Registry with the agreement and cooperation of the Title Deed holder. This enables the Title Deed holder to enter into a new sale agreement with the new buyer – so far so good. Some unscrupulous developers also use the threat of withholding the Title to demand additional payments or to stifle valid complaints by clients.
But this ‘right to sell’ is not automatic; it requires a ‘special’ clause in the original contract of sale (which also needs to limit the cancellation/transfer fee charged by the Title Deed holder at a ‘reasonable’ amount). Without such a clause, those wishing to sell their property are at the mercy of the Title Deed holder. CPAG has been contacted by a number of buyers who have been charged amounts many times greater than the actual costs incurred by the developer, to cancel their contract of sale and thereby potentially cancelling out any profit resulting from the sale.
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Under certain circumstances the Title Deed holder can still raise a mortgage using the land on which the buyer’s property is built as collateral, without their knowledge or consent. This effectively prevents buyers from selling their property – who’s going to buy a property knowing there’s a mortgage lodged against it?
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Without Title Deeds buyers are unable to raise money against the property and are unable to access any of the capital tied up in the property through equity release loans and other schemes.
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As there are also problems in obtaining mortgages on resale properties without Title Deeds, anyone wishing to buy needs to have the ready cash.
But the problems don’t end there! Even if Title Deeds are available for transfer to the buyer, the Title Deed holder needs to produce a tax clearance certificate proving that any outstanding taxes have been paid to the authorities; sometimes they refuse. As a consequence, the only way property buyers can get their Title Deeds is to pay any outstanding taxes themselves!
CPAG is aware that unscrupulous property developers, in alleged collusion with lawyers, play the system. They do not repay their mortgages and so buyers cannot receive their Title Deeds; in these cases, the Specific Performance law provides inadequate protection. Furthermore, some developers charge property buyers without Title Deeds ‘recoverable expenses’ every year until such time as their Title Deeds are available for transfer. Over a period of years, the ‘recoverable expenses’ paid by a buyer can amount to thousands of pounds. Sometimes, developers demand cash payments with neither an invoice nor a receipt being issued. And the threat of withholding Title is used when buyers refuse to pay without being properly invoiced.
And let us not forget the loss of millions of pounds to Government coffers resulting from delays in the collection of property transfer fees.
We hope that the Lands and Surveys Department’s investigation will address these issues, which will go a long way to protect the rights of property buyers and reduce the opportunity for their exploitation.
As always, we remain at the disposal of Government or any other organisation to assist in any way we can to support efforts to protect buyers’ rights and the image of Cyprus and its property market.
Cyprus Property Action Group
PO Box 62427
Paphos 8064
Letter to Costas Apostolides (Cyprus Weekly)