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Proposals to untie the Gordian knot

Proposed changes to Cyprus’ antiquated property laws may help existing buyers obtain Title Deeds to properties that have been built illegally But they contain nothing to help those who have been duped into buying mortgaged property and those whose Title Deeds are being held to ransom by unscrupulous property developers.

YESTERDAY, Cyprus Interior Minister Neoclis Sylikiotis announced a series of measures, including a town planning amnesty, to untie the “Gordian knot” keeping 130,000 properties on the island without Title Deeds.

Neoclis Sylikiotis said that the Ministry had taken action to counter “malevolent” foreign press reports about the Title Deeds saga. He attributed the reports to ‘ulterior motives’ that either sought to strengthen Cyprus’ competitors in the foreign investment market or compare the Republic’s treatment of buyers with the abuse of Greek Cypriot properties in the north.

The Minister announced a number of legal proposals that seek to tackle the complex problem of “trapped buyers” who are tied to a building that they cannot sell because they don’t have the Title Deed.

The new proposals include the introduction of a completely new system for issuing Title Deeds which will be divided into three categories, as well as penalties and a “name and shame” policy for developers that delay Title Deed applications.

This was the first time that a government had acquired a “comprehensive view” of the wider problem, said Sylikiotis, adding that bold steps had to be taken and not piecemeal changes.

The water is running now and very soon people will start getting Title Deeds,” he said.

There are currently around 130,000 units (houses, flats, hotels) without Title Deeds, while only 20,000 applications for Title Deeds have reached the Land Registry. This translates to a lot of uncollected revenue for the state in terms of taxes on transfers and other costs.

Finance Minister Charilaos Stavrakis has previously noted that €700m was collected in total tax revenues from property sales in 2008, while forecasts for 2009 were less than half that amount.

Sylikiotis told reporters that he hoped the 20,000 pending Title Deeds would be issued by June 2010. He further noted that in the free areas of Famagusta alone, around 25,000 titles had not been issued.

Head of the Land Registry, Andreas Christodoulou said that for every 10,000 titles and transfers completed, the state would receive between €100m and €120m.

The five legal proposals target amendments to existing laws on Town Planning, the Regulation of Roads and Buildings, Immoveable Property, the Sale of Land, and Contract Law.

Interested parties may read the proposals on the Ministry website and submit their comments by the end of next month. The Minister hopes to table the amendments before parliament by September and have them voted into law by the end of the year so the town planning amnesty can begin in 2010.

One of the proposals is to create a three-tier system of issuing Title Deeds, though Ministry officials acknowledge they are not certain whether the system will pass legal scrutiny yet.

The first type of Title Deed will be a “complete” Title Deed which is the same as what is issued today. The next type is called the “incomplete” Title Deed. This will be issued with an appendix noting any unauthorised but minor extensions or modifications that go beyond the issued permit, or in cases where it is not possible to identify the property boundaries for which a single unit of the whole project has exclusive rights. The third type is called the “limited” Title Deed, which will also have an appendix recording unauthorised yet substantial changes or extensions. This latter title won’t have legal status, meaning the owner can’t sell their property nor can they mortgage it.

Sylikiotis explained that the Title Deeds hierarchy would be effective since a deed could be upgraded or downgraded, depending on developments.

The Ministry also proposed imposing fines in cases where owners are reluctant to meet their obligations, thereby preventing the issuing of Title Deeds in the name of buyers who have met all their obligations. Another proposal is to make public the names of companies who are considered “repeat offenders” of this practice. This way, every future buyer knows the credibility and capabilities of the various developers, said the Minister.

The Ministry also hopes to make it compulsory to submit the contract of sale to the Land Registry, with specific sections of a building delineated as set out in the contract. Another innovation will be to give competent authorities the power to take the initiative and issue permits on the request of the buyer.

For example, where the developer fails to submit the necessary applications for approval of certain irregularities or uses the irregularities of buyers not to proceed with issuing certificate of approval or Title Deed, the competent authority may, after representations from the purchasers, automatically proceed with the examination of the building and issue various permits and approvals, with or without special notifications,” said Sylikiotis.

The amnesty will be handled by three-member committees in each district that will deal with expansions or modifications that represent up to 30 per cent of the original permit. However, this only applies to buildings constructed before the law is passed.

Copyright © Cyprus Mail 2009

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