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President abandons home buyers

In a move that many consider will destroy the island’s property market, President Anastasiades has rejected the ‘home buyers’ protection bill’ passed by Parliament on 19th March.

anastsiades betrays home buyersPRESIDENT Nicos Anastasiades has rejected a bill banning banks from repossessing homes that owners have paid for but have no title deeds because of developer mortgages, judging it to be in violation of the island’s bailout agreement.

In a letter to parliament on Friday, Anastasides said the bill, passed on March 19, was being sent back to the legislature because it created a general and permanent shield, not for vulnerable groups, but a number of sellers and land developers.

This, according to the president, was a departure from the provision to suspend repossessions of certain properties until April 30, 2015.

According to the terms of its bailout, Cyprus must enact effective foreclosures legislation.

According to the provision, such properties will be exempted provided the buyers paid at least 80 per cent of the sale price or have fully complied with their contractual obligations towards the seller.

In the letter, Anastasiades said the issue of trapped buyers was being handled by the ministries of finance and the interior in cooperation with the Central Bank.

Parliament removed the date – April 30 — that was included in the main foreclosures law, indefinitely banning repossession of houses whose owners have no title deeds, even though they may have paid for them in full, because the building developers had already taken out loans on those properties which they cannot repay.

In the same article, parliament added that apart from the buyer, the mortgagee must also inform “the debtor” about the provisions of the article so that the “buyer or/and (also added by MPs)” the debtor submits the necessary proof of payment.

Developers’ land and buildings are counted as assets that need to be offset against their debt to banks, which gives lenders a claim on people’s properties that had been mortgaged by developers.

Under the terms of its bailout, Cyprus has set up a task force “on registered, but untitled, land sales contracts” that must prepare a study by the end of May.

This should have been done by October last year.

Included in their tasks would be a financial impact assessment regarding title transfers and lifting encumbrances.

Parliament can now accept Anastasiades’ referral or reject it and let the matter be settled by the Supreme Court.

Readers' comments

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  • Pauline Read says:

    With at least 29 members of Parliament with NPLs, the incestuous nature of the system in ROC, are we surprised?

    This explains why these obvious crooks will never face legal action and will always be protected by their kith and kin who know “there but for the grace of God and our criminal acts, go I”.

  • Adam Lomas says:

    This appears to be the latest round in the “ping pong politics” between President Anastasiades and the opposition parties in government, meanwhile 1,000’s of homeowners (many of them retired and vulnerable) continue to live in the fear of repossession and/or vast legal expenses. It would be a huge relief if not only Cyprus politicians but also the TROIKA, the EU politicians and UK politicians took this seriously and forced the Cyprus government to a solution which deals with the problem properly. Forcing the developers and the lawyers and banks to accept the responsibility for the scam they perpetrated for so many years and properly protecting individual homeowners. It’s not only a new law we need it’s ACTION to get us all proper title, and to avoid the next scam which is waiting to happen when “liquidators” get involved and are allowed by law to charge up to 11% of house value to “sort things out”.

  • scruffy says:

    @ Nigel.
    Thank you for confirmation. Does indeed sound promising.

  • Scruffy says:

    Perhaps there is still a twist in the tale yet to come. If you read the comment below by JJ it may be that the information from his “reliable source” does in fact have some credence.

    Someone on the “Cyprus Eastern Forum” has received an E.mail from his solicitor this morning stating that The Minister of the Interior has instructed the House of Representatives to present, by June 30th, a new bill that will protect those who have paid for their property in full but unable to obtain deeds due to the exposure to developer mortgages.

    I have not seen any confirmation of this development in the media as yet. Hopefully this will be confirmed soon.

  • @All – The following is extracted from an email I received this morning from a reputable lawyer in Nicosia:

    “I hereby inform you that the Minister of Interior has instructed the House of Representatives to draft a bill for the protection of all buyers of properties who have paid for their properties but have been left exposed by developer mortgages, by the 30th June.”

    Things are looking positive.

  • jjames says:

    This latest turn of events would appear to return us to a position of total vulnerability, open to how the banks/liquidators decide to operate, knowing that their most damaging and unjust actions will still be “legal” – NOT MORAL but legal as the law stands.
    Peter McG. has observed his developer, over the last 8 years(!) being allowed to systematically abuse the system; we’ve all been complaining, writing letters, publishing (in the case of Nigel and Denis) and yet here we are.

    I cannot yet decide whether to be as cynical as some observers in these forums – those who see the EC as complicit in the whole debacle – as I would like to think that certain staff within the Commission BELIEVE they are helping.

    However, contained in a reply to my on-going complaint recently were these words:

    “……the College of Commissioners has decided today to address to Cyprus an additional letter of formal notice within the framework of the on-going infringement procedure.

    The Commission services will continue to exert due diligence in dealing with this case and count on the goodwill and commitment of the Cypriot authorities to swiftly proceed with solving all pending issues.” !!

    Do we, after all that we have all witnessed and documented, feel re-assured by this? I don’t think so. While the wheels of political “diplomacy” creak away we are paying thousands and thousands of euros for properties that potentially may NEVER be ours to fully own!

    When will the EC/Troika – call it what you will – WAKE UP!

  • Andrew says:

    @Steve,April 5, 2015 at 12:04 pm

    You say quite rightly;

    “The liquidator, on behalf of the bank and/or the Cyprus Revenue can go after all assets, including those without a developer mortgage for which there has been no transfer of title”.

    I wonder how many people are thinking that they are safe because their contract was lodged before the developers mortgage. Developers can choose or be forced into insolvency for many reasons and any buyer without title deeds is at seriuos risk.

    Sooner or later people will need to start a fund and take this matter to the courts. Preferably using international lawyers and courts. Cyprus lawyers have already failed to protect buyers.

  • Peter McGowan says:

    Over the last 8 years, the property developer of the complex I live in has taken out second mortgage on the land. He used this to build a second development. The company no longer trades as property developers, but has properties to sell. Why was this allowed? One of the partners in the business has now opened a restaurant. This should be sold to offset the money he has not paid to the banks or the IPT, which he has never paid.

    It seems that the Cyprus Government does not want the income from foreign buyers and is not prepared to make the banks pay for the over-lending that took place. The Government (most MPs are property developers?) needs to take action first of all against the banks and then against the property developers. Strong leadership is not coming from the Government. Therefore the TROIKA should take over and sort out this mess. It than needs to sort out the Land Registry, which is refusing to process Title Deeds for many, who are entitled to receive them.

  • Adrian says:

    This is just another case of protecting the few with money (which they have no intention of parting with)a nd they can now move the money abroad as the parliament had no problem lifting the limit. The money is then out of reach and once again the developer goes on to plunder another day and the lawyers and banks will help!!

    No Bankers,Lawyers or Developers were injured during the making of this fiasco.Any rumours that innocent people lost out was put about by disgruntled homeless families!

  • Whirlybird Rtd says:

    Putin it this way, I wonder what his recent trip abroad did for the Banking sector in Cyprus due to the heavy influence there? Mmmm.

  • Richard says:

    Banks & politicians.

    And at Easter – Jesus would be so proud….

  • Steve says:

    My guess is that the decision on the rights or wrongs of what the President has said will be decided in court. Anywhere else in the world it would be a foregone conclusion that he is right. A developer with the means to pay must be made to pay, not allowed to hide behind legislation such as this on the basis that the buyer will not be evicted, so one gets seriously hurt.

    In addition, the author has chosen to express the issues in a way that does not fully describe them. He writes about

    “indefinitely banning repossession of houses whose owners have no title deeds, even though they may have paid for them in full, because the building developers had already taken out loans on those properties which they cannot repay.”

    Many developers can repay but just choose not to, just as they choose not to pay IPT. They do it because there are no immediate consequences for them.

    The author goes on to write

    “Developers’ land and buildings are counted as assets that need to be offset against their debt to banks, which gives lenders a claim on people’s properties that had been mortgaged by developers.”

    Is it not worse than that? If the developer cannot pay, he/she is insolvent (insolvency is all about cash; businesses with sufficient illiquid assets to meet debts but no cash are the liquidators favourites.). The liquidator, on behalf of the bank and/or the Cyprus Revenue can go after all assets, including those without a developer mortgage for which there has been no transfer of title. The developer owns the land and the properties on it and those assets can be attached. The fact that the market for those assets (i.e. property) is depressed is neither here nor there; the liquidator has a job to do and a living to make.

    Further, concerning this bill, the author writes

    “In the same article, parliament added that apart from the buyer, the mortgagee must also inform “the debtor” about the provisions of the article so that the “buyer or/and (also added by MPs)” the debtor submits the necessary proof of payment.”

    The one consistent theme running through over 15 years or more of these issues is the authorities’ reluctance to go after the major culprits – the developers. The above mentioned quotation indicates that parliament is inviting the buyers to pay off the mortgage or loan debt, which will prolong the overall situation indefinitely – the “debtor” already knows he/she owes the money. It becomes ever more apparent that the affected owners without title deeds are the only ones who can change things by suing the developer. No one else will actually do anything, which is arguably the case in other countries, including the UK. The argument that the developer would not have been awarded a loan or mortgage in the UK may apply in some cases, but certainly not in those whee, for example, the developer signed the sale agreement, then went straight to the bank and took out a loan, (already arranged, maybe, but not completed?) before the buyer could deposit the contract for Specific Performance. The continuance of this disgraceful state of affairs depends on the aggrieved buyers choosing not to go to court, rather to wait for the EU, UK or Cypriot parliament to rectify the matter.

  • clive of Payia says:

    I am sure as a British-trained lawyer the President of Cyprus is well aware of the legal and moral situation and the “right thing to do.” Alas, he is President in name only; in the hands of the developers, who really run the country, along with fellow lawyers, banks and estate agents. As probably the vast majority of people caught up in this awful situation are British the European Union is unlikely to do anything serious about it, another good reason for leaving that corrupt regime.

    If, as I suspect, Cyprus will leave the eurozone and probably the EU with Greece very shortly Cyprus will lose the protection of the EU – Cyprus will be legally vulnerable to the International Courts where a different legal interpretation of the situation may be pursued.

  • Steve R says:

    What in heavens name is going on. One minute you are at the mercy of the banks, the next minute you start to feel safe and now you are back at the mercy of the bank. Due diligence by the bank must be brought into play here. Irresponsible lending to the developer that allows them to secure a loan against a property that has been paid for in full. No consideration has been given to the purchaser whilst the developer just walks away untouched. 99% of these developers were Cypriot (FACT).

    Under instruction from Troika, the banks are given the power to rob the accounts of people (All nationalities) overnight. What sort of place is this. I fully understand that without a banking system in place the island would crash but without the building trade it would also be in big trouble. There are certain elements on this island that need to stand up and be counted

  • andyp says:

    I wish I could say I am surprised but I am now well used to the Cypriot politician and their “artful ways”.

    This is going to be a bombshell for many.

    Cyprus should be very proud of itself.

  • @Scruffy & @JJ – The story is still on the Cyprus Mail website – Anastasiades rejects ‘title deeds bill’

  • Scruffy says:

    @JJ – Yes, very strange. Normally if a story has developed CM will print an update version. As you say there is absolutely no sign of this story on their website.

    Many of the articles of the last 2/3 days are still there.

  • Scruffy says:

    Well, hero or villain? The president is correct in that the proposals put forward will in fact protect the few who owe the most and not necessarily the vulnerable. I can’t see the Supreme Court deciding the proposals were valid.
    It looks like we are at the mercy of the banks after all.

    A grim prospect indeed given their track record.

    Unless the Troika step in to curtail the banks’ greed I can’t shake the feeling that our worst fears re the outcome of this mess are about to be realised.

    Once they get over the flak for destroying the lives of those caught up in this mess and they have recouped sufficient monies to refill their coffers, they will tweak or introduce a few new laws that will prevent a repeat of the debacle.
    With the passing of time it will all be forgotten and they will return to “business as usual”.

    Very sad.

  • JJ says:

    I find this very strange. Last night I was given on good authority that the bill had been passed. Last night when I got home around 2200hrs, this article was in the Cy Mail, with nearly 100 comments by the time I went to bed. Some very interesting comments. I called my contact who informed me it was passed, he replied don’t worry it will come clear on Mon or Tue, it has been passed. I just went on to Cy Mail to read more comments but the whole article is not there anymore, but this has just appeared.very interesting. I assume this article was take. From the Cy Mail last night. Why has it been taken off I wonder, very strange!!

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