VICE-PRESIDENT Reding’s reply to a request to send a fact-finding mission to Cyprus is very interesting as it would appear that there is at least one European Union Law that property developers, estate agents and others selling property are choosing to ignore, namely the Unfair Commercial Practices Directive 2005/29/EC.
The Unfair Commercial Practices Directive concerns unfair business-to-consumer commercial practices in the internal European Union market and covers goods and services including immovable property, rights and obligations.
Article 7 of the Directive discusses ‘Misleading omissions’ and states that a commercial practice shall be regarded as misleading if:
“in its factual context, taking account of all its features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.”
In layman’s terms what this means is that if you bought something (let’s say a property) and the person selling it to you failed to disclose information (about the property) that would have resulted in you not buying it, they were misleading you and would therefore be breaking European Union Law.
We know from the results of our mini-poll that we published in August that 98 percent of those who responded would not have bought a property in Cyprus had they known that their developer had mortgaged the land on which it was built.
Of course, I cannot say categorically whether or not property developers (or banks who have granted mortgages to buyers of properties built on land that they knew was mortgaged) have broken the laws of the European Union; only the European Commission can answer that question.
So if you are one of those who has bought a property in Cyprus and subsequently discovered to your horror that the land on which it was built was mortgaged, I suggest that you write to your MEP and ask him/her to raise a question in the European Parliament.
British residents will find contact details for their MEPs on the website of the UK Office of the European Parliament.
Residents of other European Union member states can find contact details for their MEPs on the website of the European Parliament.
@Costas Apacket. I agree with you. They want to have their cake and eat it too, preferably quite a few times. I have long wondered how they (the lazy greedy younger generation) were going to get back the family silver. Now I know!
Colin,
If Cypriot Developers, Banks and Lawyers participated in a simple, transparent and obvious system where property was sold with a Legal Title Deeds at the point of sale they would lose so many future opportunities to further profit out of the property purchaser, and ultimately pick up a cut price bargain when the purchaser finally gets fed up with the whole sorry mess and wants out.
In addition, I’m starting to believe that their is a psychological barrier to permanently ‘releasing’ a piece of Cyprus to foreigners.
How else can you explain why the Cypriot Government doesn’t rush to collect the billions of Euros owed to them in Title Deed transfer taxes and IPT?
This is Just Getting Worse and Worse every week I can see Cyprus Going Bankrupt Like Greece Before Long !!!
The Bank want me to Sign Brand New Legal Documents ( No Way ) Its Far Becoming a Bottomless Pit !!!
Nigel, if the contract you are referring to is for the purchase of Cypriot land then I would imagine it doesn’t matter where the contract is physically signed unless the contract specifically states that the contract is subject to UK law. That in itself would be a nightmare to take action on and unless I had a huge pot of money to pay for legal costs I wouldn’t go anywhere near it.
I am not one of these people who claims that everything that is done in the UK is ‘best’. In the case of property law though, it is quite clear that it is. I just don’t understand why the Cypriot authorities don’t change the law and replace it with the British system. Their system has led them into chaos and allowed property scams and confusion to flourish. Is it pride or stupidity or something more sinister that prevents them from doing so?
@pantheman – the survey results are what the are. Virtually all the people who buy property here are told that the property laws in Cyprus are the same as the UK – and they instruct a lawyer to represent their interests.
If a mortgaged property was sold in the UK:
(1) the vendor would probably end up in court charged with fraud.
(2) The conveyancer/lawyer representing the buyer would be sued for professional negligence.
It’s black & white – none of this making sure the wording in a contract of sale was correct – it’s fraud.
If I were to buy another property in Cyprus, I would expect the lawyer acting on my behalf to carry out exactly the same checks as if they were buying the property for themselves. And I doubt very much that any lawyer would enter into a contract to buy a property in the knowledge that it was mortgaged (unless they were a complete imbecile).
@AW – Thanks for your input – very useful.
I Agree with Nigel & Paul and refer to my first post at the beginning of this thread of how to easily contact your MP & MEP’s.
It’s really very easy so there’s no excuse for not getting on with it.
If enough of us do this then very soon a large number of UK MP’s and MEP’s will be discussing this topic and asking questions in Parliament and of the EU Commission.
I urge you to spend 15 minutes to do this asap.
http://www.easterncyprus.com/viewtopic.php?p=229940#
Seems the law was enacted in 2007. In other words, everyone who signed after 2007 is certainly protected under this law.
The survey results are deliberately misleading.
Had it asked, if you knew your developer had a mortgage on the land when you bought, but you could get a bank waiver at the time of purchase, would you still buy??
I think you would have had a different result.
There’s nothing wrong on borrowing to buy the land initially, what the developer should do, and the bank to insist on it, and the solicitor to add the relevant clause to the sale contract, is that the developer pays back part of each propertys mortgage, so by the time he has sold all the properties, there is no longer any outstanding mortgage on the land.
This is the practice that overcomes this problem and some developers do, do this.
Taking out mortgages on land after properties have been sold is a complete no no and the banks and the Lands Registry should not allow this. This would protect the initial buyers from further grief.
I sincerely hope a solution could be found for this all the buyers get justice. My opinion is the solicitors are at fault mainly. law or no law in place, any common sense agreement can be drawn up, the developer either accepts it or loses the sale, end of story.
Good luck to all in you fight.
@Nigel: or check with a local trustworthy lawyer. The latter might be quicker, I don’t know. The point is that the MEP will know about the directive, but it ultimately matters how the directive was translated into Cypriot law.
That said, this obviously needs sorting one way or the other, and if this directive has been implemented, then it certainly offers a way out for some.
We should all take notice of this and lobby our Euro MPs.
But even if this the case and developers have broken the law. They will find another loop hole to de fraud us.
Only the EU can put pressure on the Cyprus government to sort out the whole problem, and stop this on mass ( fraud ) I would suggest. But dont forget the UK government if enough of us lobby our MPs they will I suggest do some thing to get us off their back,s.
@AW – the simplest way to get these questions answered is for an MEP to raise the question in the European Parliament.
The issue is that EU law as such does not exist. What the EU does is issue directives. These directives contain guidelines and minimum requirements as well as, in some cases, exceptions for member states (such as Brittain’s opt-out of the social welfare directoves), based on which national governments can then formulate the local law.
As you can see from the directive, it was adopted by the European parlement and subsequently approved by the council of ministers in 2005. The question now becomes:
– when is the deadline for this to be implemented at the national level?
– has Cyprus already implemented this or is there an exemption or is there still time to implement this?
– is, what has been implemented, been done retrospectively? If not, it does not apply to any purchases predating when the law was enacted.
So, these questions need to be answered first before we truly see the light (or we find out the light is a train storming our way).
What is your opinion?
This is fantastic news, I will be emailing all of the MEP’s I can, and asking them to request the EU investigates Article 7 further.
I think even they will be shocked at the scale of this “misleading practice” and I hope the lot of them get a big kick up their greedy backsides.
@Colin – there are honest and trustworthy developers in Cyprus who do not sell property built on mortgaged land and it would be unfair to tar all developers with the same brush.
You said “In England, not to do so would be considered fraud. In Cyprus it is not”. It would be interesting to see how an English court would judge on the matter in circumstances where contracts of sale, etc. were completed in the UK.
Marvellous news
This is why I say again – get onto your MEP’s
The more misdeeds we get exposed – the more attention it raises & the more leverage we all have to put things right
Nigel, if the developer has mortgaged his land with a bank and the same bank gives a mortgage to the buyer without disclosing the fact that title deed to the land is held by the bank…is this breaking a code of practice or even EU law?
And if the value of the developers land is only worth say, €100k and the bank has granted a developer mortgage higher than 75% of the land value….is this also illegal and considered a ‘Breach of Contract’ ?
Land is Cyprus, especially rural (out-side of the village boundaries), is very cheap. Therefore I don’t understand why/how the developer is unable to repay the loan?
If the developers Ltd Company accounts show profit, surely the courts will insist the Ltd Company must repay the loan in order to release the title deed!
Whilst I understand the purpose and meaning of this article (and you may consider that I am splitting hairs here) it is almost 100% certain that any developer will have taken out a mortgage to purchase land.
I understand that you use the words ‘subsequently discovered’ and by implication you are saying that in the situation about which you are writing, the developer did not repay the mortgage when he sold the land.
As a result of this article, potential purchasers who are aware of the title deeds problem in Cyprus who research whether the piece of land that they are considering buying is mortgaged, will almost certainly discover that it is and consequently may be put off buying. Even if this does not put them off and to protect themselves, they stipulate to their solicitor that it is condition of purchase that the mortgaged is repaid prior to completion, because the law is so lax in Cyprus, this may not happen.
The thrust of my argument is that it is the law that is at fault. When I bought my land back in 2000, I was assured that the property laws in Cyprus were based on and the same as property law in England. I subsequently discovered that this not the case and found that it is not illegal for the developer to sell mortgaged land without repaying his mortgage either prior to or co-terminously with the sale, as is the case in England.
In England, not to do so would be considered fraud. In Cyprus it is not and this is the problem. Banks, developers and solicitors are equally to blame for allowing this to happen. However, the thrust of this campaign should not be aimed at the developers. They will do whatever the law allows them to do, even if it is morally reprehensible. The campaign must be focussed on changing the law, with (or without) the support of the banks and lawyers.
I wonder if the Unfair Commercial Practices Directive 2005/29/EC would also cover the situation where the Bank of Cyprus is charging EU Citizen (foreigners) a higher rate of mortgage interest than Cypriots, whilst using the excuse that the costs of their own borrowing is too high to lower the rates to these EU Citizens (foreigners)?
You can also find details of your MP and MEP’s at http://www.writetothem.com/ by entering your UK postcode on the front page.