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Cypriot property Title Deeds (updated)

Daniel Hannan, MEP for South East England, has raised a question in the European Parliament to eradicate any doubt that Title Deeds issued as part of Cyprus’ bailout conditions will be unencumbered.

European Parliament in session

The European Parliament in Session

THE MEMORANDUM of Understanding (MoU) agreed between Cyprus and its international lenders requires Cyprus to “eliminate the title deed issuance backlog to less than 2,000 cases of immovable property sales contracts with title deed issuance pending for more than one year” by Q4-2014.

However, of utmost importance to those who have been duped into buying property built on land that their property developer has mortgaged to the bank is that its title, when issued, will be ‘clean’ – i.e. free of encumbrances and other impediments that prevent the transfer of ownership of the property to its purchaser.

And of course there’s little point in clearing the Title Deed issuance backlog if the ownership of the properties they relate to cannot be transferred to their buyers who have paid in full for those properties – it’s merely a paper exercise.

To obtain clarification on this issue Daniel Hannan, MEP for South East England, has raised the following question in the European Union Parliament.

Question for written answer
to the Commission
Rule 117
Daniel Hannan (ECR)

Subject: Cypriot Property Title Deeds

Following the lobbying by many UK MEPs in coordination with the Cyprus Property Action Group, it is gratifying that the Commission as part of the Troika has ensured that the title deed issue is addressed by Cyprus as part of the bailout conditions.

Nevertheless, in order to eradicate any doubt could the Commission please confirm that all buyers who have hitherto paid in full for properties will have access to their deeds, without exception, as a result of this exercise? Furthermore, could the Commission also confirm that none of these deeds will have any encumbrances placed upon them?

Answer given by Mr Rehn on behalf of the Commission (added)

The Commission attaches priority to resolving the title deeds issue in the interest of the Cypriot economy, the European taxpayer, and the many EU citizens affected by the problem. In Article 5.4 of the memorandum of understanding (MoU) concluded between the Commission, acting on behalf of the European Stability Mechanism (ESM), and the Republic of Cyprus, it is therefore stated that the Cypriot authorities will, by end 2014,

‘Eliminate the title deed issuance backlog to less than 2,000 cases of immovable property sales contracts with title deed issuance pending for more than one year. The Cypriot authorities will enhance cooperation with the financial sector to ensure the swift clearing of encumbrances on title deeds to be transferred to purchasers of immovable property, and implement guaranteed timeframes for the issuance of building certificates and title deeds’

(The text of the memorandum of understanding is also available at: http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/ocp149_en.pdf)

The MoU therefore envisages a specific deadline for the elimination of the observed backlog. The swift clearing of encumbrances on title deed transfers constitutes an important element of this agreement.

Mr Hannan and the Cyprus Property Action Group must be thanked for their continuing efforts, but one issue still remains unsolved:

For the transfer of ownership of a property to be achieved, the vendor has to supply receipts from the Inland Revenue Department to the Land Registry showing that he has cleared his Immovable Property Tax and Capital Gains Tax liabilities – and receipts from the Sewerage Board and the Municipality/Community in which the property is located confirming that these charges have been paid.

It is clearly a fault in the ridiculous processes that someone who has paid for their property in full and which has a ‘clean’ title is prevented from owning that property because the vendor is either unable or unwilling to settle his tax and other liabilities.

Perhaps a further question in the European Parliament to clarify this matter is needed?

Readers' comments

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  • aggis demetriou says:

    Dear Nigel Howarth

    A Bank guarantee is not an insurance policy issued by the bank, its not covered by any insurance company and no policy is ever issued, you have been ill informed trust me on this one.

    I hope you publish this.

  • jjames says:

    Have been reading articles in Cyprus Mail for the last month now and nothing leads me to believe that true justice will prevail.

    July 25th – developers owing millions named.

    Since then – no more mention made.

    These are the people, along with their crooked lawyers and free-lending banks, who are holding the whole process up. Unfortunately too many other fat cats in “high” office entwined in the process for anything ever to be done.

  • Mike says:

    Please don’t build your hopes too high. If you do manage to receive clean title to at least your land then consider it a bonus. Title to the house too will be more than should be expected. This is, after all, Cyprus, the land of “artful ways” and definite maybe’s. As Aesop, a Greek slave and fable author once said “we hang petty thieves and appoint great ones to public office”. Never a truer word spoken.
    We should never lose sight of the fact that ‘Politics is the gentle art of securing votes from the poor and campaign funds from the rich, by promising to protect each from the other’. As long as we never lose sight of that fact then the rest falls into context. Don’t expect too much and judge on results. Good luck to you all in your quest for justice.

  • Stuart says:

    As always, andyp put his finger on the crucial issue!

    EU responses are rarely clear and unambiguous, always framed in language that suggests a ‘definite maybe’.

    Mr Rehn is merely reiterating the sort of responses we had from Ms Reding to the same questions. The magic date of 2014 when everything gets resolved continues to be quoted in replies to MEP’s who are still trying to get some definitive answers to the vexed question of the Title Deeds fiasco.

    Their continuing efforts combined with those of the CPAG are to be applauded but the MoU only ‘envisages’ specific deadlines and never states what will happen in the event those deadlines are breached.

  • Costas Apacket says:

    Given all of the massive changes now happening in the RoC, wouldn’t it be sensible if the Government just announced that the whole property conveyance, building control and legal systems involved in property purchasing were being overhauled and brought into line with EU best practices, and that unencumbered Individual Title Deeds would be transferred to the individual purchaser(s)upon delivery / transfer of the property to those purchasers upon full payment being made?

    Failure to instigate this simple and very achievable decision means that properties being constructed right now, today, will still be sold without their Individual Title Deeds being available at the point of sale / transfer.

    Surely this contradicts the spirit of what the EU MoU is trying to achieve by clearing the backlog of outstanding Title Deeds by the final quarter of 2014?

  • andyp says:

    Not a clear response to the question in my opinion.

    This answer will not let people sleep soundly in their beds.

    We need a simple yes or no as to whether or not unpaid developer’s mortgages secured on other peoples property will be the responsibility of the bank and developer and have no bearing on the issue of a clean title to the rightful owner.

    Too much to expect from a politician I suppose.

  • kufrahdog says:

    @Aggis Demetriou – I have now had time to do some research on ‘Bank Guarantees’ and have some understanding how the practice is linked with the banks’ asset-based lending practices. Given the systemic failures of the Cypriot national property framework, I am not surprised to learn that this is a lucrative business for the banks and one which they would wish to keep going. Thank you for your advice. KD.

  • aggis demetriou says:

    @kufrahdog, reply to your posting, “Bank Guarantee”

    This is not an insurance, Please don’t be fooled by the Cypriot banks, I have sold over 100 new properties here in Cyprus and none have Titles, this so called bank guarantee is designed for them to get money for nothing, most of the properties I have sold which have loans on I managed to obtain the “Bank Guarantee’s with a waiver” No Fees, don’t be fooled into thinking its an insurance.

    Basically if the purchaser don’t pay his loan the bank will try and get the money from the developer.

    Like I said the “Bank Guarantee” is another way of the banks sucking us dry.

    Remember this is Cyprus its a kingdom within a kingdom, but its slowly crumbling.

  • @kufrahdog – basically a Bank Guarantee is an insurance policy issued by the bank for the issue of Title Deeds in a specified period of time. The annual premium is around 1.8% of the sum insured.

    If the Title Deeds do not materialise within the specified time period you can make a claim to recover your money.

  • kufrahdog says:

    @ Nigel – re the post from aggis demetriou on 11 June 13 at 8:55 pm: Can you throw some light on this money making scheme? How does it work? This appears to have serious implications.

  • aggis demetriou says:

    Don’t build up your hopes yet, the banks in Cyprus looks like they control everything, they don’t want titles issued, as one will know that the banks are making a lot of money out of “Bank Guarantees” they make an average of €3000 per property every year on property with no titles.

    Dear reader do you really think they will let you have your title? think again troika or no troika……..

  • Martyn says:

    Some Good progress is finally being made but as several have said below there will, despite troika requirements, still be enough ‘wriggle room’ for the Cyprus lawyers, banks, executives/managers, government department managers, agents and property developers to wriggle, duck and dive to ensure that effectively these problems drag on until many of those who helped create – and benefit from – the problems are ‘safely’ retired! Which means the Cyprus property situations, markets and the country’s overall Image will simply worsen yet further, the backlog of ‘infected’ and/or ‘inferior’ and therefore unsaleable properties will enlarge too and unlike, other better governed and regulated countries.

    With increasingly bad publicity Cyprus will it now seems come to languish down the bottom of the tables of ‘safe and desirable international locations in which to invest in or own property’. Let’s just remember its only 7 years since the Sunday Times rated it in the Top Three places in the world to own property, work/retire and Live!! Who now will ‘take a chance’ on buying a property in this country when all the hard and soft indicators suggest it will take years, decades even, to clear/clean up the problems/practices of the past whilst it seems thousands, nay 10s of thousands I’d wager, of new properties continue to be built?

    Sadly, a king-size version of the mayhem already affecting Irish and Spanish property markets looks firmly in prospect, all the worse because the country remained in Denial for so many years. What a MESS!

  • kufrahdog says:

    @ Nigel – many thanks for your response and good to meet with again you today. Best wishes, kufrahdog.

  • @kufrahdog – the lobbyists are attempting to achieve FULL Title Deeds.

  • Andrew says:

    I can understand the real concerns of Kufrahdog. However if unencumbered Title is given for the land that has been bought, then everything on that land should rightfully belong to the buyer. That may leave some owners with poorly built homes and without Completion certificates but that should be something that the authorities would have to settle with the developers. The owner might decide to put right the irregularities at his own expense and sue the developers. This is not a perfect solution but the home-buyer would at least own his land and his rotten building which is something.

    Of course, if the Cyprus authorities are hell bent on not issuing title deeds, then they will carry on using these infringements as an excuse and that abuse needs addressing immediately.

    Well done CPAG and Daniel. Keep piling on the pressure. It does make you wonder why Cyprus is unable to see the damage that is being done, or could it be that the current state of affairs somehow intended?.

  • KC says:

    Thank you Daniel Hannan with support from the CPAG for raising this question in the European Parliament.

    It is anything but clear what will happen to the title deeds of a property where, for example, a developer is unable to pay his mortgage or income tax debts.

    I for one have been wondering whether I need to start court proceedings. In the meantime to add to my anxiety Cyprus has decided to impose a time limitation on bringing cases to court.

    I hope we get a speedy answer to this important question.

  • Costas Apacket says:

    Well done indeed to both DH and CPAG for their continuing fight to ensure that UK and EU Citizens receive fair and equal treatment from another, supposedly, EU State.

    Pity the EU State in question cannot, or will not, sort out this shameful situation by itself, but then those with vested interest for maintaining the status quo do not seem to mind this being a National disgrace as long as they are allright Jack.

  • Dutchnick says:

    Being short of natural resources Cyprus has had until now rely on Tourism and has been effective in selling the place as a nice place to holiday/live. I have never understood how such an obvious impediment to being able to have simple clean title to properties and having planning laws that were not a joke and were enforced could be so neglected. Totally self inflicted problems which properly implemented and enforced laws would transform the property market. The negative press, dilatory courts and perverse judgements have cost the country dear. Come on Cyprus you can do it, if you wish!

  • John Swift says:

    Well done Daniel Hannan, keep it up don’t let it go away until the issue is sorted.

  • kufrahdog says:

    @ Nigel – thank you for your reply. What concerns me is that the efforts of Daniel Hannan , CPAG and others may only result in receiving my title deeds for the land only, the mortgage encumbrance effectively being removed. The FULL Title Deed would remain impossible to achieve as it would be prevented by the infringement on the house which was created by the developer. This would appear to be the risk in the approach being made by the lobbyists. I was under the impression, wrongly it would seem, that the lobbying efforts of MEPs etc against the Cyprus government was designed to overcome encumbrances AND infringements, thus enabling us all to receive FULL title Deeds. Let us be clear: what are the lobbyists attempting to achieve on our behalf – land only or full Title Deeds?

  • UBoat says:

    Well this is all is very good.

    Thank you all for getting it this far.

    I still have a fear that in my case with my developer, he will just ignore what has to be done like he has done in the past.

    Except for the fact he installed a sewage plant, (Great) But the job was done so badly that it leaked and did not work correctly. But still he wanted us a development to take it on and look after it financially. My point here is now I read your article that the sewage authority will have to give a certificate as well as the local then I doubt that we will get our approval to issue title for another 100 years if ever. In that case WHAT will be done about it by 2014 deadline?

    Sorry but all I see here is more obstacles, it’s like digging a hole in dry sand.

  • @kufrahdog – ‘Encumbrances’ is a general term for all impediments that prevent the legal transfer of a property. These include a mortgage, a deposit of contract of sale for a property, a memorandum (memo), a lien and other claims.

    ‘Planning Infringements’ are not encumbrances, they are violations of the planning regulations and laws that make it impossible to issue a Certificate of Final Approval for a building until those violations have been rectified. (As you are well aware, the Cypriot authorities are rubbish at enforcing planning laws and regulations and a number of ‘planning amnesties’ have been initiated to ‘legitimise’ illegal buildings so that their Certificate of Final Approval can be issued).

    The problem for someone buying a property off-plan is that a Certificate of Final Approval for a property is needed before its Title Deed can be issued. IMHO a situation akin to being prevented from registering a motor vehicle because it doesn’t have a valid MOT certificate.

    The Cypriot authorities cannot remove the mortgage encumbering the property you have purchased (although it could chose to overlook any planning infringements). However, the lending bank may be willing to transfer the encumbrance to another piece of land owned by the developer and remove the encumbrance from your property.

    In some cases the Inland Revenue Department will obtain a court order enabling it to lodge a ‘memo’ against the title – this is an encumbrance. This has been happening at the Eastern end of the island and in some cases the Inland Revenue has moved these memos onto other property owned by the developer.

  • kufrahdog says:

    @ Nigel – my apologies for asking you to split hairs, but I would grateful if you would kindly clarify the following issues arising from your article.

    First, Mr Daniel Hannan’s question for a written answer to the Commission actually does not hit the nail on the head for everyone and begs clarification. In the last sentence of the second paragraph he specifically mentions ‘encumbrances’. Does this mean impediments arising from mortgage loans given by lending banks to developers and relating to a specific property? Or, is it being used in an inclusive sense to also encompass ‘infringements’ relating to violations of planning and building law and regulations? In my experience of dealing with the Cypriot authorities there is a difference between ‘encumbrances’ and ‘infringements’ and I trust that this distinction is understood and appreciated by Daniel Hannan, the Commission and the Troika.

    Second, in the third line of the second paragraph of your text you refer to ‘free of encumbrances and other impediments’. This does not have the same meaning as Daniel Hannan’s written words, because he refers only to ‘encumbrances’. By ‘impediments’ I assume you mean ‘infringements’ as described above? There would appear to be a gap between what you mean and what Daniel Hannan has written – would you please clarify and or reconcile.

    These distinctions are important to me because in my case I have both a (mortgage) encumbrance on my property and a severe infringement arising from the developer’s deliberate violation of planning and building laws / regulations which makes my house illegal. From an administrative point of view I assume that it would be easier for the Cypriot authorities to remove the mortgage encumbrance than it would be to remove the infringement.

    Your point concerning clearance certificates relating to Immovable Property Tax and Capital Gains Tax liabilities plus Sewerage Board and Municipality / Community charges is noted. In my case the developer’s tax liabilities have been placed by the Inland Revenue against the property I have purchased in full as Court Orders (memos) and this has been recorded at the Land Registry. Again, I hope that Daniel Hannan, the Commission and the Troika understand the complexities that have to be undone at a micro level and how very specific they have to be when dealing with Cypriot politicians and civil servants.

    I look forward to your reply.

  • jon frazer says:

    We would like to say a heartfelt “Thank you” to Denis and CPAG, and to Daniel Hannan MEP, for raising this very important point in the European Parliament.

    Snakes weave, writhe and wriggle, and I believe we are going to see a lot of snake-like behaviour from the defenders of the “establishment” in Cyprus.

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