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This legalised theft must end

When is the Government of Cyprus going to change the laws that force those who have been scammed by their developer to pick up his bills or face losing their homes?

daylight robberyA BANK in Cyprus and the Island’s Inland Revenue Department are pursuing the clients of a property developer who has fled the Island. They are demanding that buyers repay the developer’s mortgage and his unpaid taxes.

When is the Cyprus Government going to put an end to this ‘legalised theft’. Can you imagine this happening in any other civilised country? If you were to buy a car from a dealer and pay for that car in full, would the Inland Revenue and the bank chase you for the dealer’s debts if he absconded or his company went into liquidation?

Unfortunately, this is not the way the law works in Cyprus. If your developer fails to pay his mortgage and you do not have the Title Deed to the property registered in your name, the banks will demand money from you using the threat of taking your home away from you to elicit payment.

And if your developer fails to produce a ‘tax clearance certificate’ at the Land Registry when your Title Deed becomes available, the Land Registry will refuse to transfer ownership of the property into your name.

Bearing in mind that you will have already paid for your house in full, why does the law allow you as a buyer to be penalised for the transgressions of your developer? Why does the Inland Revenue not pursue the developer for the taxes he owes? After all it is he who owes the taxes and has the money to pay; so why does the law allow this to happen?

The situation in Cyprus reminds me very much of some graffiti I once read on a wall of a gents toilet in the House of Commons. It read:

“is there any intelligent life in Westminster?”

Someone had scrawled an answer:

“yes, but I am only visiting!”

The Cyprus Government has promised to introduce legislation to resolve these issues (yawn). Whether it will remains to be seen; discussions are continuing.

Readers' comments

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  • Unbelievable says:

    @AnnDee,

    It’s very difficult for government departments and various other groups to take certain people to court. Everyone knows everyone or is connected through extended family.

    That’s why the law is never enforced for Cypriots!

    “oh, he’s my brothers uncle’s cousin. Lets turn a blind eye this time”

  • Denton Mackrell says:

    Thanks Nigel. The developer I was talking about is not in the Paphos district; sounds like a different case? Also, any info on the broader question of what proportion of the 6bn is toxic?

  • @Denton Mackrell – I know, from someone who had a N.50 search carried out by the Land Registry, that a developer has €100 million loan on ONE of his developments.

    I do not know if he has problems servicing the debt.

  • Denton Mackrell says:

    @Clive Fletcher. Just a point on the toxic debt issue. At last call (2009), the amount of outstanding developer mortgage debt in Cyprus held by the banks was estimated to be around Euro 6 billion. A figure of Euro 90 million for the toxic component of that seems far too small. For example, I am aware of an individual developer owing over Euro 100m and being in serious trouble with servicing the debt. Can Nigel or anyone enlighten us please?

  • Paul Lambert says:

    I am a campaigner against the property scandals in Cyprus and I, along with others, will continue to contact all relevant government departments in Cyprus and the EU to highlight these issues. The problem with those in charge of Cyprus is the long term ingrained corruption that has been allowed to continue. It makes you wonder how close to the top of government this corruption gets ! The fact that Cyprus will be allowed to have the presidency of the EU next year is nothing short of laughable.

    Here is a quote from the Cyprus Minister for Justice

    “The meaning of freedom is undermined, if not surrounded by a safe environment and a just and functioning legal system. The citizens of the European Union should have equal access to justice ”

    When you stop rolling around on the floor laughing, you will wonder how anyone serving in the government of Cyprus could have the temerity to make such a statement.

  • @AnnDee – I don’t understand the logic behind the way things are done here.

    There are many things that the Inland Revenue & the banks should do, but I don’t make the rules. That’s up to the Government of Cyprus.

  • AnnDee says:

    Why don’t the bank and the Tax Department take the developers own house off him and go for his other personal assets, such as latest model merc. Don’t developers have any personal liability Nigel?

  • @Martyn – Unfortunately it isn’t a wind up – it’s the way things are done in Cyprus.

    There is no reasoned logic behind it – Aristotle would turn in his grave.

  • Martyn says:

    Noting the date of Publication of your article I did at first wonder if this was an April 1st wind-up – but presume it wasn’t!

    That said, well done Nigel for highlighting this Outrage — which, I would, think, is WELL outside any EC legislation, framework, protocols. This, added to all the other scams and sheer fraudulent trading and bad business practices by Developers, and in some cases,clearly, their Bankers, in Cyprus over the years could if given the international publicity it deserves, massively reduce the attractiveness of Cyprus as a ‘place to buy property’ — with all the impacts and influencers we might expect on Market values of existing properties. NOT Good,

  • Cyprus Expat says:

    Thanx Nigel for highlighting the other issues concerning default on mortgages. Many people, including myself, are unaware of these problems.

  • Road Warrior says:

    The whole point is…….Cyprus is not a civilised country, it’s a “banana republic” with no idea of justice or fairness.

    How on earth this third world nightmare was ever granted membership of the EU is beyond me. They are incapable of rectifying the situation, first of all they would need to actually acknowledge that a problem exists, it’s beyond them, totally. The situation right now serves the developers, the builders, the legal profession, all groups with a vested interest in ensuring the status quo.

  • Peter & all says:

    I can confirm that all this is exactly true as written as it has happened to me in a private purchase & I had to pay the sellers taxes, capital gains tax (on the gain he made on the property he sold me) his fines imposed by the tax office for late payment etc. All this in order to get the tax clearance certificate in order to expedite the issue of my deeds at land registry.

    What I wanted to add though was it is a waste of time & effort complaining to the police & Ombudswoman as nothing wrong has been done (in their eyes). I actually found the previous Ombudswoman to be a waste of Oxygen when it came to a complaint against land registry & it was a legitimate complaint of failure to carry out its duties in violation of its own citizens charter. (But did take the payment to carry out those duties). A separate but related matter. Please do not think for one moment that the normal organs of government & law that most civilised countries abide by apply in Cyprus. They do not.

    I am waiting for someone, one day, to inform me that any car accident in Cyprus involving a Cypriot & foreigner must be the foreigners fault because had he not been there the accident would never have happened. That is the sort of Nigerian logic that is applied here. Do not be fooled by claims of everyone being a university graduate & suchlike. Paper qualifications can never instil common sense, manners, understanding, compassion, ethics, morals, foresight, forethought or an understanding of what is right & wrong. We are in the 21st Century but our thinking is more often than not still in the 12th Century. Denial is the byword.

    Now, I must tell you that I am a Greek Cypriot, speak the language (obviously), understand everything told to me and the process & even I got caught. What chance has any one else got at the hands of those who are out to deceive. They are crooks & hustlers and will always find unsuspecting victims anywhere in the world but in Cyprus they are facilitated by the Government & legal profession (I use the word profession in its very loosest sense).

  • Clive Fletcher says:

    It is the banks that hold the key to all of this for they are the only chain in the link that has to conform to international (banking) standards.

    If scammed buyers could organise themselves and get independent, EU, auditors to review the legality of just a few of these ‘developer loans/mortgages’ rendering them ‘null and void’ the whole thing would collapse and the Cyprus government would be forced to pick up the 90-odd million toxic debt these loans have now become.

    Same with the taxes owed by developers. If buyers haven’t taken their TD’s they cannot be forced to pay them and the government would again be losing huge amounts of revenue and would probably have to pick these up again. Now where would Standard and Poor’s rate put Cyprus. And all when Cyprus it about to taken on the Rotating Presidency.

  • Denis says:

    These buyers will also have to pay the Official Receiver’s very substantial fees as well no doubt.

    What more proof does anyone need that the so-called Specific Performance law protection when buyers lodge their contract at the Land Registry (and pay for the pleasure) is just another piece of gross deception by the so-called authorities in Cyprus?

  • Mr Happy says:

    When will the English language newspapers reporting on Cyprus start naming and shaming.

    The article highlights the problem but doesn’t allow the reader the option of making an informed choice when it comes to which businesses/banks to avoid.

  • Peter says:

    They have a child like mentality that sees things differently to grown ups. Its not that they know or think they are doing wrong. All they know is they are owed money and don’t care who pays. The definition of blackmail is… “With a view to gain for himself or another or with intent to cause loss to another makes an unwarranted demand with menaces”.

    Of course the police in Cyprus have no idea of criminal law, so my advice is first report the matter to the police and then apply to the Ombudsman and then the ECHR.

  • andyp says:

    Here was stupid me thinking I only had the developers mortgage to worry about. Obviously I did not know I might have to pay the B******s taxes as well.

    I might have a spare 35 euros at the end of this will I be required to save this for the developer’s petrol in order for him to do a runner?

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