Latest Headlines

Do not be fooled by guaranteed Title Deeds

In efforts to promote sales in Cyprus, some developers are advertising their properties with ‘Guaranteed Title Deeds’; do not allow yourself to be fooled.

SINCE news of the Title Deed scams hit the headlines and made potential buyers much more aware of the problems, a number of  developers are advertising their properties with slogans like ‘Guaranteed Title Deeds’ and ‘Title Deeds to be Delivered Shortly’ in their efforts to entice buyers.

Do not be fooled by this advertising; there is no such thing as a ‘Guaranteed Title Deed’ (unless the property you are thinking of buying already has one and there are no claims lodged against it at the Land Registry).

A Title Deed guarantee is a limited ‘insurance policy’ from a bank (a bank guarantee) against which buyers may claim compensation if the developer fails to register the property in their name by a specified date. They do provide property buyers with an added degree of protection and making a claim against a Bank Guarantee should not result in buyers losing their property.

But this added degree of protection comes at a cost; somewhere between 1.5% and 2.0% per annum of the sum insured. So if you take a Bank Guarantee of £200,000 for a period of five years, it will cost you between £15,000 and £20,000 to insure for something that is yours as a right; the property’s Title Deed.

Some developers refuse to give bank guarantees as they have to ‘lock’ the sum insured with the bank for the duration of the guarantee. Furthermore it leaves them exposed in situations where delays in issuing Title Deeds are outside their control.

In some areas of the island, property developers agree to bear the costs of a Bank Guarantee for two years, although I suspect that its cost is factored into the selling price. In most areas of course it takes significantly longer than two years for Title Deeds to be issued.

I have been assured that the specimen below is a ‘standard’ Bank Guarantee letter. Please ensure that you take independent legal advice before signing any agreement.

Body specimen of Letter Guarantee

In consideration of your granting a loan to xxxxxxxxxxx (hereinafter called ‘the buyer’) for the purpose of enabling the buyer to partly meet his obligations under a contract date xx/xx/xxxx entered into between the buyer on the one part and Messrs xxxxxxxxxx (hereinafter called ‘the seller’) on the other part, for the purchase of an xxxxxxxxx, forming part of the project xxxxxx, which will be constructed on part of the land under Reg. No. xxxxxx plot No.xxxxx sheet/plan xxxxx at the area xxxxxxxxxx (hereinafter called ‘the property’) we hereby at the request of the applicant guarantee the seller up to the sum of £xxxxxxx- (say: xxxxxxx) plus interest at a variable rate to be determined by reference to the Central Bank’s Rate from time to time plus margin …..% p.a. to the effect that the seller shall, until xx/xx/xxxx register the aforementioned property in the name of the buyer, free of any encumbrances.

Provided always that the total liability of the Bank hereunder is limited to £xxxxx,- (say: xxxxxxxxxxx) plus interest at variable rate to be determined by reference to the Central Bank’s Rate from time to time plus margin ….% p.a.

With reference to the above we, xxxxx Ltd, xxxxx Branch, undertake to pay to you the aforesaid amount of up to £xxxx, (say: xxxxxxxxxxxx) plus interest at a variable rate to be determined by reference to the Central Bank’s Rate from time to time plus margin …..% p.a without any reference to and in spite of any contestation by the applicant or the seller on your first demand being made to us in writing by registered mail, or by delivery by hand at our offices stating that:

  1. The seller has not by xx/xx/xxxx registered the aforesaid property, free of any encumbrances, in the name of the buyer OR

    the seller transferred the title of the property to the buyer without giving at least 15 days written notice to you through the Issuing Bank (ourselves) of the intended transfer and

  2. That you claim payment under this guarantee.

Any claim under this guarantee must be made as stated above in time to be received by us not later than xx/xx/xxxx (one month after the date seller is obliged to transfer) after which date our guarantee shall cease and be of no effect whatsoever whether returned to us or not.

This guarantee becomes ipso factor null void and no effect if at any time during its validity the title of the property as above is transferred by the seller to the buyer and the buyer mortgages it in favour of your Bank, such Mortgage becomes your security in lieu of this Guarantee.

Provided that in case the title of the property will not have been issued by the District Lands Office until xx/xx/xxxx and provided you have not submitted a written demand as provided above, this Guarantee shall automatically be renewed for a further period of one year under the same terms and conditions except the present condition of renewal and it shall finally expire on xx/xx/xxxx.

Provided that any claim in case of renewal must be received by us not earlier than xx/xx/xxxx – (the renewal registration date) ant not later than xx/xx/xxxx.

xxxxxxx Bank ltd

Readers' comments

Comments on this article are no longer being accepted.

  • Matt says:

    Hi Paul,

    I hate saying this, but I’ve mentioned on many previous articles that MP’s & MEP’s can not get your title deeds or refunds back.

    Unfortunately, everyone needs to issue a Writ against their developer if they feel there is a ‘Breach of Contract’.

    This must be so distressing and I’m sure there are so many people at the end of their tethers trying to work out how to pull out of a bad financial situation.

    The pain and suffering caused by all this makes me so angry. There was a time when I once planned to take my young family to Cyprus (my mother country). But I really do not want my kids being exposed to the new breed (greed) of Cypriots…not all Cypriots of course, but there are enough bad ones over there to make me want to stay well away from this corrupt sad little island.

    Lawyers wont sue other lawyers. Banks wont listen to foreign investors. Government officials wont speak or reply to foreigners and developers just laugh in your face.

    TAKE YOUR MONEY OUT OF CYPRUS AND KEEP WELL AWAY.

    10yrs from now, Cyprus will be pleading for the very nice English to return and spend spend spend.

    Once bitten – Twice Shy !

  • paul ruse says:

    I want to share a letter off my MP Andrew Mitchell, with every one. It reads:

    Thank you for your further emails concerning property owners in Cyprus.

    As I explained to you when we met at my advice session this is a matter for lawyers and I do hope (the word hope is underlined) that you are able to secure impartial and effective advice on the way forward.

    Best wishes and a signature.

    I am not going to let this drop and via this Web site I would like to know of any one else who has had positive or negative response from their UK MP. Andrew Mitchell is the over seas development minister and is the member for Sutton Coldfield in the west Midlands.

  • Greg Gregory says:

    Nigel, in 2008 I was approached by a few so called developers to underwrite similar schemes and even guarantees for 10 years for new build homes against shoddy workmanship.

    Needless to say, both the banks I had experience of dealing with and the developers ultimately helped me decide that the Cypriot perception of insurance and finance had influenced me in staying put in the U.K.

    Historically finance and insurance in my opinion, also being of Cypriot origin, does not constitute good business practice and security for the end user in Cyprus and arguably to the underwriters!!!

  • Peter says:

    Another problem has just surfaced.

    One of my friend went with her developer to the Land Registry to collect the title deeds (Paphos). The Land Registry would not allow the transfer to take place as the Developer could not provide a recent up to date certificate to show he had paid all his company taxes.

    The villa was an asset of his company and to transfer ownership he was required to pay all outstanding taxes owed to the Government, before he removed assets off the books.

    He eventually came back the following week and the lady got her deeds.

    But how many developers must now be feeling ‘the heat’ with the downturn in the market place, and the Government will take president over an owners claim, even if there was NO mortgage on the land, the Government will come before the current occupier to sell the home to pay off outstanding taxes.

  • yrret says:

    Bottom line is, if it’s not completed, with services (water electric) connected, a verified genuine title deed in the vendors hand so you can go along with the vendor and the title deed to the land registry and confirm it debt free, and transfer the title immediately, then walk away. After all, there is no shortage of properties for sale.

    Next progression I can see for the housing industry will be forged titles being passed off an genuine.

  • Dee says:

    OMG; another layer of ‘scam’ on top of all the other layers!

    Many thanks Nigel, for bringing this to our attention.

  • John Scott says:

    Nice article and interesting. Like a previous commentary, don’t buy unless there are clear, unencumbered deeds available for transferring into your name. No Deeds, No Money!

    Developers and builders are clearly searching for innovative ways of luring the unsuspecting into the trap!

    Where else in the world or even in the UK would someone give their life savings to another without security. Contracts are worthless, Deeds are everything! Integrity and honesty appear to be in short supply.

    Remember, No Deeds, No Money!

  • Steveo says:

    Great work Nigel all the Guarantees & handshakes in the world won’t help Cyprus. It at least shows that the snakes are feeling the bite now ! They have one course of action and I know it’s gonna hurt, don’t sell something which is NOT YOURS. All buyers do not but anything without a title no matter how well he dances or rubs your back !

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

  • Text size

Back to top