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New law boost for Cyprus property buyers

Today’s Cyprus Weekly carried a report on the new law passed by parliament earlier this month concerning buyers trapped by developers’ mortgages.

PROPERTY buyers trapped because their developer has mortgaged the title to a financial institution can now obtain the title by paying the mortgage directly to the bank themselves under a new law on real estate purchases.

It was the last of a series of bills introduced under the general idea of town planning amnesty in order to solve accumulated problems in the real estate market.

The new law also provides that the sales contract shall take precedence over the mortgage.

Another bill amending the prevailing contract law was rejected by the majority of the House, with only 17 MPs of the government supporter AKEL and the Greens voting for it.

The House committee had suggested the government should withdraw the amendment bill but met with a refusal.

The rejected bill provided for all contract sales or gifts concerning real estate to be in writing and submitted to the competent land registry in order to be valid.

Editor’s comment

This is ridiculous! How many people are going to be prepared to pay for their house twice? Buyers had no idea that developers had mortgaged the land, yet this law makes them responsible for paying it.

Using some warped sense of logic buyers have to pay the developer’s mortgage because they bought the house.

It will make Aristotle turn in his grave!

Readers' comments

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  • Howard says:

    @Unbelievable – are you on the wacky backy like someone else has suggested?

    You asked why Healys do’nt keep up with important information like Nigel does. What on earth has this to do with paying solicitors for the work they do, be it Healys or any other law firm?

    If people cannot afford legal fees, they can apply for legal aid.

  • Unbelievable says:

    Howard – either you’re not getting the point matey or your a Healys Lover!

    Let me explain to YOU one last time..

    Did you read a previous article on this site regarding Healys Law Firm willing to help out victims of Cyprus fraud etc?

    If you did, then you would also know they want CASH upfront before they lift a finger.

    My point is simple – DON’T TRUST ANY CYPRIOT LAWYER IN ANY COUNTRY.

  • Howard says:

    @Unbelievable – re your comment at April 25, 2011 at 10:48 am

    Do you really believe that a leading city law firm is going to publish the news regularly. Don’t you think lawyers have better things to do with their time?

    Name me one law firm that does this.

    You are indeed unbelievable!

  • @dimitri – unfortunately, grey matter doesn’t come into the equation – vested interests seem to have a much bigger say on the the new laws.

  • dimitri says:

    The whole shambles of a system cannot go on this way, anyone with an ounce of grey matter will see this is totally alien…so it is now law that if you bought a property off plan and contract stipulated it cost X and when deeds are issued you will be notified, only to find down the road that the cost is X plus whatever the developer owes to the banks?

  • Andrew says:

    These people must spend hours chuckling and sipping their Zivania while they dream up yet another Catch-22 situation.

    At what stage does the contract have to be lodged before it takes precedence over a mortgage.

  • Unbelievable says:

    @Howard – I assume you are referring to my April 23rd 10:09 comment?

    Healys LLP, a UK law firm, has kindly offered to help those who have been conned by the crocked Cypriot system.

    CPAG setup the relationship and information was posted on this forum. (Nigel can give you the link)

    OK, what’s my point?

    If Healys care about our plight and really want to help make a difference, then why don’t they keep up to date with important issues as Nigel kindly does?

    Read comment posted by Costas Apacket (April 22 8:55). Last paragraph. Read his paragraph and you will KNOW what on earth I am talking about.

    Makes no difference if the Cypriot lawyer is in Cyprus or outside!

  • Howard says:

    @Unbelievable – What on earth are you talking about? Are you that conman in Pafos trying to rip off Alpha Panareti customers by bad mouthing the honest people trying to help them?

  • AnnDee says:

    @ Nigel. “It will make Aristotle turn in his grave!” you say. It won’t make Aristo turn in his though!

    So basically nothing has changed; the developers carry on taking out mortgages on sold and paid for property and they can continue to default on repayments. Banks have already been offering purchasers mortgages to pay off the developer debt to get their title deed, so this new law simply formalises that. Buyers still remain at risk of repossession.

    If in a moment of complete lunacy I go to an independent (ha-ha) lawyer with the intention of buying from a developer,will the lawyer check if the purchase price is vastly inflated to include the developer mortgage? Will the breakdown be in the contract? Will the transfer tax be paid on the selling price including or excluding the debt?

  • jon frazer says:

    Suggestions:

    1) Support CPAG, and continue to do all positive things such as contacting MEPs, MPs and the media.

    2) If you haven’t done so already, get every cent you don’t immediately require off Cyprus.

    3) Withhold all illegally demanded monies from developers, lawyers etc. If you don’t need the title deeds in order to sell and to get out, let them sing for their “title deed” extortions.

    4) Buy whenever possible from the internet, brit shops and charity shops (We have to!).

    5) If you’re still wasting time and money on “greek” lessons, give them a miss and get out in the lovely sunshine, in the hills!

    Happy Easter to you all, and keep on fighting!

  • out of the frying pan into the fire says:

    I don’t understand the comments below.

    It is clear, we the Government, Lawyers, Banks, Developers want to rip you off what is your problem?

    Just hand over all your money and go away. Bye.

  • D. Baggard says:

    This country needs to be thoroughly cleansed of the downright in your face corruption, How is another story. There are many very nice and good people in Cyprus but their government are old fashioned and in no way compliant to EU laws and directives just looking to line their own pockets from EU funding and keeping to the old ‘Hey this is Cyprus’ mentality !! This is so annoying as how are the younger generation of Cypriots going to prosper and develop. THIS is the reason people should never buy property in Cyprus because you are never going to develop as a country when your lawyers are so corrupt and in the developers pockets and this so called new boost in law helps no one but the corrupt!! Do they think the brits and other honest people who have put millions of pounds into their country in property and tourism over the years are that stupid to pay blatant developers debt.

  • Odd_Job_Bob says:

    Dania, what if there is no EU? Or rather a two tier EU, with the rich countries having one currency and the poorer ones another completely rubbish Euro?

    What if a very weakened EU has no power to force Cyprus to do anything (as has been the case so far), what then?

    What if Cyprus, realising that it gains no benefit from being a member of the EU (as the money has dried up), withdraws?

    Do the maths with regards to your property. How much will you have to pay just to get your property transferred into your name and your title deeds (of which there is no guarantee)? Compare that with the value of your home (now that no-one but the terminally silly are buying here).

    Is it worth it?

    Bearing in mind ALL you have read over the past year with regards to reforms and changes to the system to make it better for us etc, is there ANYTHING that you’ve seen that shows the Cyprus government’s willingness to do anything about this situation? Are you willing to continue to throw money into this system in the smiley-faced hope that at some stage, you will get your deeds?

  • UnbelievableNo mention of any says:

    Just had a look at Healys LLP website – International

    No mention of any new Cyprus updates. Especially as important as this one and they even rank Cyprus at number 4 for Top Investing Countries. UK is rated at number 7.

    OK Healy LLP, I really trust you guys and believe you will do your best to protect us simple English folk..

    You aint getting my money :-)

  • UBoat says:

    @ Peter
    I fully agree with you we purchased in 2002 and in exactly the same way we put faith in the so called Law in Cyprus as we were told by our solicitor in Paralimni not far from the cross roads that the laws where the same as in England. Now as many people know we were so wrong and so misled. All in the name of Cyprus law. That was clearly wrong and misleading. I agree SMOKE & Mirrors; they should all have been illusionists.

    And to top it off when you confront your old solicitor and ask for help to get your title deeds. He told me he could not as it puts him in a bad position with a conflict of interest ? That did not stop him representing me in the beginning did it?

    Don’t trust one of them.

    UBoat

  • @Dania – it’s what I would call ‘smoke & mirrors’.

    Hopefully I will be able to publish a critique of the new laws in the next few weeks.

  • Dania says:

    What a farce!! So you can pay off the developers loan – BUT the contract of sale takes precedence over any mortgage – can someone please tell me what this really means?????

    I honestly doubt anyone knows but I would suggest that the new law would not be valid in the EU courts so all of us without the TD to our house will win in the end, let’s just hope it is before our great-grandchildren’s time :)

  • @Martyn – There is a further problem here as the Land Registries will only reveal details of mortgages etc. to ‘interested persons’. According to the Department of Lands & Surveys:

    “Interested persons” means the owner of the property, his heirs, devisees and legatees, the owner of any trees, buildings or other objects on the land which belongs to another and vice versa, the person entitled to any right or interest in the immovable property, who satisfies the Director that he is a prospective purchaser or mortgagor, the plaintiff in any action against the owner of such property, the professional valuer who may require certain information for purposes of the valuing certain immovable property in a case relating to compulsory acquisition and includes any person not thus specified to whom the Director may specifically order that any information be furnished.

    And would you believe that even Estate Agents cannot get information out of the Land Registry for their clients; the laws in Cyprus are different to those in England & Wales (and I presume Scotland):

    In England and Wales the Land Registry operates an open register which means that copies of all documents referred to on the registered title can be obtained by anyone, subject to payment of the necessary fee.

    In Cyprus information or documents in the public register of Titles connected with the ownership of immovable properties and charges or encumbrances lodged against them are treated as confidential and unavailable for public inspection.

    This effectively prevents a potential property buyer finding out who owns a particular property or whether a property he/she is thinking of buying is mortgaged until after they have signed a contract of sale to purchase it; by which time of course, it is too late!

    (The system was relaxed last year, but it still requires potential buyers to get papers signed and take them to the Land Registry Office – see New title search procedures in Cyprus).

  • Peter says:

    @ Martyn

    When we bought our villa in 2001 we used a lady who advertised herself as a UK trained Cypriot solicitor. I questioned the bit about title deeds in the contract and was informed that the delay was due to the amount of building work on the Island, she stated that the rules of buying of property in Cyprus were identical to the UK and that the delay would not be more than 18 months.

    In short I put my total faith in my solicitor. Yes I could have gone to the Land Registry, that is presuming I knew where they was (but I didn’t) and that I am fluent in Greek (which I wasn’t) and I knew what to ask (which I didn’t) but that wouldn’t have helped me anyway as my house was still in the process of being built. It didn’t have a completion certificate so the land registry wouldn’t have the details of my development. Details were still at the Council office in Paphos.

    With hindsight it is very easy to criticise those who bought in the early days, before the hype of the title deed fiasco. I put my total faith in my (Cypriot) lawyer, as I did when I bought my home in the UK. And no I didn’t check if my solicitor in the UK was doing his job properly. I took that for granted, presuming that I was still dealing with a professional…Many of us now know better.

  • Alan Waring says:

    @Martyn. I may be wrong but from the sound of it, you are not that familiar with the problem here and yes we can all understand how some newcomers to the issue throw their hands in the air and shriek ‘buyer beware!’ why did so many not do their due diligence before buying? That’s what any normal person from a normal country would think.

    The situation is far from that simple and it many did in fact do as much due diligence checks as the situation here allows. Unfortunately not only developers and their agents lied to buyers during those checks but so also did the buyers’ lawyers – the very people whom the buyers should have been able to rely on to act with full integrity and not act negligently or, worse, act as a hidden agent for the developer. All this is examined at length in recent articles and threads on this website:

    Who is the real culprit?

    Landmark ruling by the Supreme Court

    @Tony Fletcher. Same comments as above. The government here and the Bar Association (equiv of Law Society) are all in cahoots with the very developers you suggest they sort out!!

  • Tony Fletcher says:

    It is about time that the Cyprus Government and Law Society Stood up for Property Buyers and take the Developers to task. Would they pay somebody else’s Mortgage. Not on your Life. I think that the EU should be involved in this battle for the rights of EU citizens.

  • Denton Mackrell says:

    What I find as worrying is the lack of critical comment or analysis by the Cyprus Weekly journalist who wrote it and the editor who approved it. No credit to them. Simply reporting ‘this is what the government has said’ suggests that CW is just a government mouthpiece. Wot?! In Cyprus?! Never!

  • Gavin Jones says:

    Day after day we get confirmation of exactly how sleazy and warped this island is and this latest ‘law’ is yet another in a long line of jiggery-pokery.

    And from where does all this emanate? Self-serving lawyers, the majority of whom are the Deputies in the Cypriot parliament. And as for the forthcoming elections, they’re simply moving the chairs around and it’ll be business as usual afterwards.

    A perfect candidate for a revolution would be this island as the criteria fit the bill perfectly. However, it’s unlikely as the population is so apathetic, sycophantic when it comes to authority, hardly ever complains or publicly protests when it comes to the unspeakable actions of its rulers: they should consider taking a leaf out of the Egyptians, Libyans, Tunisians, Syrians and Yemenis whose demand is for more freedom AND the sweeping away of corruption.

    Having said that, perhaps people DO get the governments that they deserve…

  • Unbelievable says:

    Thats finally it !!!

    Final Nail in the housing market for Cyprus – RIP

    I’m finding it hard to justify writing this comment as this new law is 100% certified looney.

    Putting the EU legality to one side, It’s impossible to work out who needs to pay what percentage of the developers million euro loan.

    The Developers have had their fill, now it’s the lawyers turn. This new law is designed to line the pockets of Cypriot lawyers for a couple of years before the law is over turned by the EU.

    DO NOT GIVE A PENNY MORE TO CYPRIOT LAWYERS !

    Keep hold of your money and keep fighting for your RIGHTS !

    Cyprus can go #### themselves

  • Stuart says:

    @Jim

    If your suggestion is in fact correct, it would make a lot of sense for any outstanding developer’s mortgage to be deducted from the sale price so that the purchaser simply pays the balance.

    It is surely just too ridiculous (even for Cyprus) to imagine that the buyer has to pay the developer’s outstanding mortgage on top of the sale price.

    If that were the case, nothing would ever get sold except of course to victims of misrepresentation but, there again, that’s what the Cyprus property market relies on.

  • Johnny Cyprus says:

    Developments should be divided into individual plots before any part can be sold.

    Any mortgage outstanding on an individual plot should be fully discharged before the buyers solicitor hands over the purchase monies and completes the contract. All taxes including any transfer tax should be paid at the time and title should be transferred to the new owner. In the case of new builds, the completion certificate should be produced at this time too.

    If progress payments are specified in the contract, then any mortgage should be discharged between the initial deposit, or reserve fee and the payment of the first progress payment, when the buyer effectively buys the plot.

    That’s what happens in civilised countries.

    It’s quite ridiculous to permit real estate transfers without documentation. There will be disputes over title and tax dodging as a result. That’s probably what some people want.

  • Campbell Findlay says:

    I take it that this ridiculous piece of “legislation” aimed at sorting out the title deeds situation has been sent to the British Press/MEPs etc.

    You are doing a grand job!

    Cheers,
    Campbell.

  • Clive Fletcher says:

    Why are we not surprised!

    With so many buyers without the financial means to pay off developers loans they should do nothing and collectively, and publicly inform the banks that they aren’t responsible for the loan(s). With so much money involved the individual banks depositors and investors will soon put pressure on them to get the banks or the government to write it off as Toxic Debt.

    The Cyprus Government may try to enforce the law that it is illegal to occupy a property that doesn’t have a Final Clearance Certificate – but with so many people of many nationalities involved I doubt it.

    But this is Cyprus folks…………

  • Dave says:

    Still a no win situation then! Nothing has changed nothing will. Cannot someone sit at the table with these morons at their next meeting and explain that it is not right to pay for something twice. Do they have this problem with their mortgages? Do they shop and pay for their goods at every till, surely not! Do they fill up with petrol and pay twice, buy a Merc and pay cash then pay off the H.P. I think not! Why are they so adamant that what they are doing is fair!

  • Dee says:

    Unbelievable!!

  • Martyn says:

    Yes ridiculous, but are we saying neither the Buyers nor their Solicitors checked whether the properties were mortgaged to the bank and if they did – and they were – why didn’t they ensure clear Title was passed As part of the Completion of the Purchase – and if they failed to do so then surely it should be they, the Solicitors, who have to pick up the tab, pay off the Mortgage holder.

    Overall, we all know the expression ‘let the Buyer beware’, it’s surely As relevant here, no Title, no Deal. I can hardly believe so many people have simply ‘walked into the trap’, or been fraudulently led into it!

  • Rona says:

    We have a houseful of MP’s with IQ’s slightly higher than a radish. Their main interest is getting paid, getting multiple pensions, posing at funerals and on TV or making speeches promoting their various political parties. Passing fair laws is not high on their list of priorities.

  • Odd_Job_Bob says:

    In answer to Robert Brigg’s question which, having looked into all the ins and outs of the whole property scam in Cyprus, is really the only relevant question: yes.

    I’ve done the maths (I love spreadsheets me!) and if you assume you bought your property in year x, it grew in value for a few years then started to fall (and is likely to continue to do so at rate y), you paid your property developer z amount for the property, you’ve paid IPT at 4% of 50% of the highest perceived value (a normal PD notional amount), you pay off his mortgage (at say 60% loan to valuation, possibly including penal rates of interest at 12% that he’s not paid since he sold it to you), there is VAT and CGT of his to pay as well (at 15% and 20% respectively), there is a building fine for non-compliance with building regulations (% of property value unknown but let’s say 10%), transfer tax of €7,000 plus solicitor’s fees (no idea, say 2% of property value), YOU WILL BE PAYING MORE IN FEES AND FINES AND TAXES THAN YOUR PROPERTY IS WORTH. Oh, and there’s still your mortgage to pay as well.

    I’ve said this before (and I’ll say it again): we MUST consider the property purchase we’ve made here as a toxic asset. The money we’ve paid into it is LOST. Continuing to throw good money after bad is not clever. This is not defeatism, it is cold, hard realism. There has got to come a point whereby you realise “They are taking the p, I’m not playing any more”. Robert Briggs has (I think?) So have I. What about the rest of us?

  • Peter says:

    Of course I’ve just realised, having cleared off the developers loan, the Land Registry still won’t allow the transfer of the title deed as the developer is required to produce a current tax receipt.

    So can I confirm if it’s OK for me to clear his taxes as well?

  • Costas Apacket says:

    Jim – your logic is fine, but your assumptions are a little naive.

    Firstly you assume that ‘your’ lawyer will tell you if his mate, the Developer, has got an outstanding mortgage, using the main Title Deed covering your development as collateral, so that you can hold back X percent of the asking price in order to pay the Bank your percentage of the Developer’s mortgage loan and thus obtain your individual Title Deeds.

    In actual fact ‘your’ lawyer will not even mention this significant fact to you and you will actually end up paying 100% of the sale price to your Developer only to then find out that your Title Deeds are not forthcoming for some unknown reason. (unknown to you that is.)

    Even then you may continue to be unaware or unable to find out that the real reason you cannot obtain your Title Deeds is because of this encumbrance, due to the Developer mortgage, because all of the Governmental departments who hold any sort of significant information about this are not very helpful in clarifying anything which may serve to help you.

    The lawyers are key to this whole scam because it is they who should ensure legal ownership of a property should transfer from seller to buyer on completion of the sale.

    I don’t hear any Cypriot lawyers complaining about the unfairness and legal unsuitability of the Cyprus property market because they have their fingers well and truly deep in the pie.

  • Robert Briggs says:

    Are these people taking the p**s?

  • Peter says:

    I can’t wait to pay off my developer’s mortgage so that I can pay the Government another lump sum for ownership of my property.

    I don’t mind living in poverty if it means my developer, God bless him, can afford the best. All I ask is that occasionally he allows me a bone from his table.

  • Jim says:

    Maybe I have got this wrong, but I presume the government are saying, if you are wanting to buy a house from a developer & your lawyer finds out the developer has a mortgage on the land, you can pay off the part of the mortgaged land that applies to your house & pay what remains to the developer.

    This of course is of no use to people who have already bought & paid the developer.

  • James JH Lockhart says:

    Did nobody do due diligence in letting Cyprus into the EU ?

  • Cyprus Expat says:

    This is so ridiculous, I am going for a beer! It sounds like a better idea! What next!

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