CYPRUS Property News has received several complaints alleging the use of uncertified Power of Attorney documents to obtain mortgages on behalf of those purchasing property.
In many cases it appears that the banks involved failed to check the validity of Power of Attorney documents and are pursuing buyers for mortgage arrears; using the threat of court action to elicit payment.
Those who have complained to the banks concerned, receive a terse reply:
“The issues you raise regarding certification of the Power of Attorney document do not negate the validity of the contract entered into with the Bank. Under Cyprus law there is no requirement for a formal certification of a Power of Attorney. A power of attorney can be valid even if it bears only the signature of the grantor.”
We have sought legal opinion on the banks’ response to these complaints from one of the Island’s leading law firms. We suggest that anyone in this situation who receives correspondence from a bank in Cyprus chasing them for mortgage arrears replies accordingly.
Legal opinion from a leading law firm
The law in Cyprus provides for the appointment of Certifying Officers who are entrusted with the duty to certify the signature of a person signing a document such as a Power of Attorney.
The purpose of the law is twofold, the one is to facilitate a person to appoint somebody else in order to act on his behalf at his absence and therefore his signature as “principal” is required to be certified, and the other is to ensure the legality and safety of transactions, especially the ones concerning the transfer and mortgage of immovable property in Cyprus.
Generally under s. 7 of the Certifying Officers Law, Cap 39, a Certifying Officer will not certify the signature or the seal of a person unless:
- the signature or seal is affixed to the document in his presence;
- the person signing or sealing the document is personally known to the Certifying Officer, or his identity is attested by two persons personally known to the Certifying Officer, who shall sign the document as witnesses to the seal or signature of the principal party.
The fact that a person signing the Power of Attorney is doing so in the presence of the Certifying Officer, after he shows to the officer his identity card or passport and the officer compares his signature and photograph, is not enough to render the document valid or to allow the Certifying Officer legitimately to certify the signature of that person. On the contrary, such a Power of Attorney is not valid and any transfer, mortgage or encumbrance over an immovable property pursuant to the said Power of Attorney can subsequently be cancelled by the principal.
It becomes evident that private individuals, bank organizations, Certifying Officers and everybody else must be extremely careful not to put themselves in such a situation.
When a Power of Attorney is accepted by the Land Registry, this does not imply that the transfer or even the mortgage of an immovable property is valid, since it is not in a position to identify whether the person granting the Power of Attorney was personally known to the Certifying Officer. The transaction depends on the subsequent behaviour of the principal party, whether he will accept or question it. The Certifying Officers ought to follow accurately the law at all times for both the protection of themselves and of the transactions.
In the case of Georgios Antoniou v Demetras Christodoulou case number 10802, dated 19.2.2003, provides that a signature of a person can be certified by a Certifying Officer only if the person signing is personally known to the officer and that this requirement has nothing to do with the showing of his identity card. The law refers to a pre-existing personal acquaintance other than the introduction at the time of the signing. If this requirement is not satisfied, the alternative way available is to have two other persons attesting the identity of the person signing, who must be personally known to the officer and sign as witnesses. This case was appealed and the Supreme Court approved the District Court’s decision.
There are declarations, documents or transactions conducted by a representative whereby the law does not require the authority to be written and certified by a Certifying Officer. However, with regard to immovable property, and in the present case this is of interest to us, for the declaration of the agent to be accepted, either for the transfer or the mortgage of a property, the law requires the agent to submit a written authorisation/Power of Attorney legally certified by a Certifying Officer in accordance with the provisions of the Certifying Officers’ Law.
Consequently, if such authorisation/Power of Attorney was not legally certified, it may cause the transfer or the mortgage of the property to be declared null and void.