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I would not have bought in Cyprus had I known

An overwhelming number of our readers would not have bought a property in Cyprus had they known that their developer had mortgaged the land on which it was built.

A RECENT mini-poll conducted by the on-line Cyprus Property News magazine revealed that some 98% of the 1,035 readers who voted would not have bought property in Cyprus had they known that their developer had mortgaged the land on which it was built.

Poll results - Buying property built on mortgaged land

Poll results - Buying property built on mortgaged land

This follows a poll we carried out earlier this year in which more than 90% of our readers who voted called on the Cyprus government to ban the sale of mortgaged property.

Speaking last year to an audience of property sector professionals, MPs and mayors Interior Minister Neoclis Sylikiotis said that “The seriousness of the current situation is creating dangers for the property market in the future” – and went on to speak about the problem of “taking out a second or even third mortgage in order to recycle capital into other projects, or postponing things to suit.

However, it remains to be seen whether the government has the courage to introduce legislation outlawing the sale of mortgaged property if it is opposed by political heavyweights in the real estate industry.

Given the fact that a number of property developers have already collapsed and that many of those who bought property from them have been left to the mercy of the banks, it is absolutely essential that anyone considering buying property in Cyprus engages an  independent lawyer to act on their behalf and obtains a Title Search from the Land Registry to discover whether their potential purchase is mortgaged.

Readers' comments

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  • Marjorie says:

    OK, all noted regarding the issues raised by developers having re-mortgaged land that houses already sold to house-owners but what about developers who have blatantly flouted the law by not adhering to the plans for developments submitted for planning approval and who some 10-12 years later have not completed the development through whatever reason?.

    We live on an estate not completed in it’s entirety, particular buildings having been erected where shops were detailed to have been and now house-owners being asked to ‘cough-up’ some 10 – 12 years later for any minor adjustments having been made to their properties within that time frame?.

    Where is the promise that the deeds will be issued when all that has been attended to OR will there be other costs involved in getting what should have rightfully been afforded to us in the 1st instance?

  • James JH lockhart says:

    John Savidge

    Was your first lawyer ******* *********** president of the Paphos bar I have brought charges Against ?

  • brian says:

    Just the tip of the iceberg of so called developers running business’ they can’t afford to be in using other peoples money.

    North or south, what it demonstrates more than anything is that they are ‘all the same peoples’ with the same inabilities prevalent all over the island.

    If a handful of builders operated a correctly managed ‘stage payment’ system where your payment was used on your house, it would be pretty much a first, instead, the vast majority of so called developers take a deposit on their first house, and buy a nice car, then need the payment from the second house to start the first one, oh, and to run the new car etc. The domino effect on living beyond their means soon takes over.

  • John Savidge says:

    I cannot understand how the european parliment and courts are not getting involved with this lot. There is massive fraud taking place here, this is being underwritten by the Cypriot government as they make their laws.

    As Cyprus is a member of the EU and is very happy to take the EU hand outs for the new infrastructure ie roads etc, surely it is about time they got their own property industry infrastructure right as well. I’m sure that the EU Parliament will get more and more involved eventually as people complain to their European MPs.

    By the way I think we have the same idiot of a developer as Janis Ryan, just to keep you up tp date Janis I believe he’s in Mexico now. possibly our first lawyer was the same too.

  • Chris Woodward says:

    Left to the mercy of the banks indeed, it should be the property developers who should be made to pay!

  • Rosemarie says:

    Nigel says developers have to raise capital for their projects. Accepted, so this is happening worldwide. Forgive my ignorance here, but what exactly is it in Cyprus law that allows the buyer to be the victim? We don’t hear of a property being mortgaged by the developer or subsequent mortgages being raised on the property after it has been purchased on new property sales in UK. (or are there such cases?)

    Gordon’s comment about the survey being ridiculous…would you have got on a plane if you knew it was going to crash? Well that’s a bit of a daft comparison. Are we duped into flying? We know before we take off we are at risk and nobody will give any guarantees. We accept that risk because it isn’t possible to make any checks.

    In the case of purchasing property here we employ lawyers to check on encumbrances and it is certainly possible for individuals to check with the Land Registry if the developer has a mortgage on the property. We attempt in every way to mitigate the risk, something we can’t do when setting foot on a plane.

  • Frank says:

    @Gordon

    You completely miss the point. This is all about the ethics of deliberately concealing information which is pertinent to the customer’s decision.

    Your metaphor of a plane which will certainly crash is only valid if you consider the morality of an airline which KNEW that the plane would crash: yet withheld that information and continued to sell tickets to doomed customers.

    The integrity of such an airline is directly comparable with the integrity of a developer who deliberately conceals that he is selling property which is encumbered by a mortgage; as well as the principles of the solicitor who helps the developer to mask the encumbrance.

  • @KP & @John Goldacre

    I think that everyone appreciates that developers have to raise capital for their construction projects. But what developers are doing by not repaying mortgages and in some cases re-mortgaging the land for their next project is putting those who have bought property at risk of losing their homes.

    Any decent lawyer would advise their client about the existence of a mortgage and get the developer to obtain a waiver on the property being sold from the bank.

    However, developers, their ‘pet’ lawyers and the banks who loan money to those buying property do not advise buyers that the property they’re buying is already mortgaged. Furthermore when buyers discover that their property is mortgaged, the banks refuse to tell them how much is outstanding.

    And the banks will not issue a waiver or cancel the encumbrance on Title until such time as all/part of a mortgage has been repaid.

  • Peter says:

    Well the whole world now knows how the Cypriot Developer works.

    He sell a house on land he has already mortgaged to the bank, and will never clear the mortgage.

    In effect the word is out, ‘buy in Cyprus and it will end in tears’

    The goose is finally cooked and its time the EU stepped in, which is what will happen eventually.

    In the meantime it will take another generation for the market here to clean up its act and get to position it was prior to 2002.

    The good days are over, and the lean times are ahead.

  • Gordon says:

    What a ridiculous survey. Doesn’t tell anyone anything. It is like saying would you have got on a plane if you knew it was going to crash!

  • John Goldacre says:

    I have to say developers in the majority of cases must mortgage to fund the projects, but this is where a good independent professional estate agent comes in, they should have all the processes and staff in place to ensure even if a client has a lawyer that they are doing the due diligence on behalf of their clients, this is where a lot of people mke the mistake of thinking that buying direct from a developer they are in a better position or going to save money.. the answer is a big no if you employ the services of an independent estate agent you are getting what you pay for the same property at the same price you would from a developer but you have someone independent working on your behalf to ensure you get exactly what you pay for, in all the years we have been in business at ******** Estates not one of our clients have never received full and clear title nor has anyone ever lost any money. Independent Estate Agents are about looking after their buying clients not about the people paying the commissions, because when you have sold to a client who are you left with ? The client and not the vendor..

  • graham cockroft says:

    The developers have always done this lousy trick. I worked for one in 199- and he explained in great detail how it worked.’No one will ever own these houses, even if they pay cash’ he told me as the site will never be sub-divided as the last house won`t be finished. Makes the company books look great and always good for a loan for the next site.

    Its criminal they should all be jailed along with their lawyers and bank managers they work in cahoots with.

  • James JH lockhart says:

    Janis Ryan,

    The Lawyer you mention I have brought Charges Against following the Procedures laid down by the AG/CBA,

    You can contact me via Nigel Who has my Email Address.

  • Steve says:

    Is it not curious that the very people who have been ripped off when they bought mortgaged property become overnight expert enough to instruct the government on how to solve the problem?

    I can’t see the Cyprus government banning the mortgaging of property (basically the land on which property is to be built) to finance the building of the property. The banks will not lend money without security, so many builder/developers would cease to operate without mortgaging and, of course, it’s good business for the banks. The buyers best defence, as you say in the article, is a good, honest, independent lawyer.

    There is an old saying – “Be careful what you wish for, you might get it.” For example, instead of mortgaging, the developers purchase contract could call for an immediate payment for the land on signing the contract, before building started and, in addition, tie the purchaser to that same developer for the building of the house, making stage payments to limit the developers costs at each stage of building. Then almost everybody would be buying off-plan. That’s fine until the builder falls behind or never completes. Very soon there would be calls to ban buying off-plan, which actually might not be a bad thing, considering the sort of changes that some developers make between signing the purchase agreement and completing the development

  • KP says:

    I am an estate agent. Before posting comments such as the above you have to transmit the correct picture to your audience. Developers need financing to build projects.

    I agree there should be mechanisms to stop banks from remortgaging land that has been already mortgaged. As you must be well aware when a sale is made, the proportional plot of land reflecting the size of the apartment or the house is waived from the mortgage of the developer.

  • Stuart says:

    A sales contract that contains stage payments against future calendar dates rather than against percentages of completion is another good reason not to buy anything in Cyprus even if the land is not mortgaged.

    Buyers could easily end up paying the full purchase price without the developer having laid a single brick.

  • Clive Fletcher says:

    As the title deeds fiasco is still unresolved and likely to be so for some time, perhaps its time to push for a Judicial Review of the “loans on land” debarcle.

    If under Cypriot law it isn’t illegal – presumably little can be done. If however they are illegal and pronounced so, the lawyers will turn on the developers, banks and the government to make huge profits out of the hundreds of thousand of court cases that will follow.

  • Ryan says:

    Your comment about engaging an independent lawyer was interesting, We employed xxxxxxx xxxxxxxxxxxx in Paphos who is chief of the Bar council in Paphos to act on behalf in purchasing a property, we thought he would look after our interest in his high position he would know what he was doing.

    How wrong were we, he neither checked himself or advised us of any danger that there might be a builders mortgage on our property, our developer has absconded to the USA and we are left at the mercy of our bank. We are trying to negotiate with them to do a deal but they want the full amount of the mortgage on the land, as we have already paid for our property we don’t have that kind of money.

    Even if you take all the necessary steps through a legal Solicitor, they will still not look after your interests, they either don’t bother, lie or just don’t care.

    Regards
    Janis Ryan

  • LBAG says:

    Why are we not surprised by the results of your survey?

    Who are the 2% who would have bought?

    It really is past the time that Bankers, Developers, Lawyers and Politicians took note and changed their ways and moved into 21st century Europe.

    As usual more questions than answers!

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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