MANY buyers in Cyprus have been deceived into buying properties by developers who have withheld the vital fact that there are mortgages on the land on which these properties are built.
If buyers had been informed of the presence of these mortgages then most, if not all, would not have purchased these properties. This deception has only been possible due to the buyers’ own lawyers failing to provide a duty of care to their clients by not even warning them of the risks of this situation.
Finally, the banks involved have effectively made these buyers the ultimate guarantors of these developer mortgages without their permission or even knowledge. Should the developer go bust the buyers will be faced with paying off these mortgages. If a buyer is unable, the banks can repossess their property and auction it to recover their loan to the developer.
There is no doubt that the banks and their unethical practices are at the root of the major risks buyers in Cyprus currently face. Just as the behaviour of banks worldwide have been the cause of so much damage to the economies of many countries the banks in Cyprus have set up a scenario that will do so much damage unless the Government acts quickly and decisively.
Unfortunately, the risks taken are now coming home to roost due to the current global financial crisis. The Central Bank has recently accused the banks of attempting to hide the problematic debts of hundreds of developers by restructuring the loans instead of properly reporting these bad debts; which if properly reported could affect the share price and credit ratings of the banks.
Many worried buyers have now found out from the Land Registry that their developers have mortgages on their homes and as a result cannot transfer the Title Deed. What they don’t know is the current extent of these loans as banks mostly refuse to discuss this, claiming client confidentially, unless of course the developer is in real trouble and the bank is looking to the buyers for reimbursement.
Accordingly, the Cyprus Property Action Group (CPAG) is starting a series of demonstrations against banks to press for full disclosure to buyers of developer account balances on loans encumbering their homes.
The first of these will be held against Bank of Cyprus in Paphos on the 27th of November at 10:00hrs – full details on CPAG’s website www.cyprus-property-action-group.net