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

Shed a tear for the whinging banks

whinging Cypriot banksCYPRIOT banks will have problem with their capital if parliament votes in favour of the bill to secure title deeds to the trapped property owners.

The bill gives discretionary powers to the Director of the Land Registry, under certain conditions, to discharge and/or eliminate and/or transfer and/or cancel the mortgage and/or encumbrance and/or prohibition that encumbers the property or part thereof, with the purpose of transferring the property in the name of the purchaser, provided that the purchase price has been fully paid, or the balance is deposited in a special temporary account.

Speaking before the joint session of the House Finance and Interior Committees, the representative of the banks’ association Demetra Valianti Plati expressed reservations about the bill, noting that many trapped owners will not secure a title deed.

She said the banks cannot be responsible for the fact that when some land developers, rather than using the money to repay their loan, they used it for another purpose.

She noted that land developers should have informed banks on the sales made, stressing that the banks cannot undertake a 100% share of the law enforcement.

The representative of the banks also expressed reservations for the transfer of the mortgage of land developers to other properties or their guarantors, noting that “if they do not own property we will be left exposed” and wondered how the Land Registry will decide if the collateral is of the same value.

She stressed that it is difficult to find a property that gives the same coverage and banks will remain exposed.

A representative of the Central Bank noted that banks were asked to analyse the impacts from the implementation of the bill, stressing that the banks did not send the relevant data.

Interior Minister Socrates Hasikos said that banks are not convincing and “it is not enough to have knowledge, they should have known where the money went. They did not do that”.

He stressed that the bank ought to monitor every sale made by the land developers.

The representative of the bank, in response to Mr. Hasikos’ argument, said that the only way the bank could know about the sales was to be outside of the office of the land developers.

The Finance Ministry representative said that a new bill will be filed in October according to which sales will not be permitted if the buyer is not guaranteed.