- Cyprus Property News Magazine - http://www.news.cyprus-property-buyers.com -

Cypriot developers find new ways to extort money

LAST YEAR, the Cyprus government introduced a new law, ‘The Sale of Immovable Property (Specific Performance)’,  N81(I)/2011. This put an end to disreputable property developers extorting money from their customers who wished to sell a property they had purchased before its Title Deed had been issued.

Under this new law, ‘Vesting Contracts’ were introduced, which enable a property without a Title Deed to be sold without the cooperation or involvement of the developer.

But faced with a loss of revenue from the downturn in the market, the more disreputable property developers have been busy inventing new ways to extort money from their customers, including:

Administration fees

Some developers are charging what they term ‘administration fees’ to facilitate the transfer of title to the purchaser. This charge is demanded even though it is the developer’s responsibility to progress the issuing of separate Title Deeds and to transfer the property to the purchaser at their expense.

Town planning amnesty charges

Although many developers have submitted applications under the provisions of the ‘Town Planning Amnesty’ at their expense, others are charging their customers. When challenged they respond that the charges are for the architects fees and other work involved in getting the Title Deed issued. Once again responsibility for progressing the issue of separate Title Deeds and the associated costs rests with the developer, not those who have purchased the property.

Communal charges

Communal charges is another area that is exploited by some developers for their personal gain. In one case reported to me recently, the buyers of five town houses each received invoices ranging between €2,000 to more than €4,000 for what the developer termed ‘project insurance’. Other buyers have reported receiving demands for maintenance charges although it is abundantly clear that no services have been provided.

Perhaps a more worrying situation in Paphos is that one developer is charging his foreign customers considerably more than their Cypriot neighbours.

Immovable property tax

The Immovable Property Tax scam seems to be getting worse. I receive frequent emails about property developers issuing demands based on the purchase price of a property rather than its 1980 value. In some cases, developers are adding 9 percent interest on back years’ charges.

When challenged, some of these developers re-issue their demands. But rather than calling them ‘Immovable Property Tax’ they refer to them as ‘Administration Fees’ (see above).

Comment

Whatever steps the government may take in its efforts to protect the interests of those buying property in Cyprus, unscrupulous individuals can easily exploit loopholes in the law or think up new ways of extracting money from their customers.

Regrettably, innocent purchasers often find they have to give in to this extortion as the legal costs involved in seeking justice far outweigh the sums of money being demanded – and their cases could take many years to be decided in the courts.