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MPs slammed over hidden mortgages bill

The Cyprus Interior Minister Socratis Hasikos slammed MPs for shelving the Title Deeds bill designed to address the inability of home buyers to get the deeds to the property they purchased.

title-deed-issuesINTERIOR Minister Socratis Hasikos slammed parliament on Friday for shelving a government bill designed to protect house buyers without title deeds, asking whom the lawmakers were trying to protect.

The bill, submitted by the government in June, was meant to sort out the mess created by the failure to provide title deeds to people who paid for the property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.

“Whom is parliament trying to protect? Trapped buyers of mortgaged real estate or the banks,” Hasikos said.

On Thursday, parliament apparently decided to kick the can down the road, despite the universal demand by political parties for the government to resolve the problem.

“It is with surprise that we found out that parliament was asking the government for one thing but yesterday it did another,” Hasikos said in a statement.

Instead of putting the bill to the vote, parties chose to suspend foreclosure of such properties until the end of the year.

The reason for this development was not immediately known.

“The bill in question, which would have provided a final solution to the problem, has not been approved yet by parliament and it looks like the discussion is postponed for September or October or being shelved,” Hasikos said.

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

Thousands have been left without deeds as a result.

The bill grants the head of the Land Registry department the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions.

Under the provisions, for a ‘trapped’ property to be eligible for release, the sale price must have been paid in full by the buyer. In case of an outstanding amount, the buyer can deposit it in an escrow account managed by the land registry director.

The director will have the power to transfer mortgages to other property belonging to the vendor. If no such property is available, the director can transfer the encumbrances on individuals who guaranteed the seller’s obligations.

Banks had expressed opposition to the bill.

They warned that transferring developers’ mortgages onto other properties or guarantors would likely leave the banks wanting for collateral.

For example, lenders would be left exposed where the guarantors did not have commensurate property of their own.

They also questioned how the land registry can determine whether the alternate property is of a similar value to be put up as collateral.

Shelving the bill also prompted the outrage of the Association for the Protection of Primary Residences, which issued a statement saying temporary protection from foreclosure is not a definitive solution.

“This bill gave an immediate and final solution to a distortion that has distressed thousands of people for several years,” the association said.

“During discussion of the bill at [parliamentary] committee level, all political parties supported it, leaving the Banks’ Association the sole dissenter.”

“So what prevented its immediate passing? Was it the usual pressure from the ‘usual suspects’ on political parties and deputies, or were all parties surprised by the paradox of coming to a unanimous decision for the good of the people?”

Readers' comments

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  • houlou says:

    @Nigel I will see if I can get clarification, in the meantime haven’t found the draft bill all i found was a statement in Greek by Hasikos slamming MPS, alas no English translation….

    Γραπτή Δήλωση του Υπουργού Εσωτερικών για το Νόμο που τροποποιεί τους περί Μεταβιβάσεως και Υποθηκεύσεως Ακινήτων Νόμους

  • @All – at various dates and times – I’ve had another look at the article that houlou highlighted – «Απεγκλωβισμός» με πολλές προϋποθέσεις.

    I believe that my original translation was incorrect.

    The penalty of €10,000 is imposed in cases where the vendor or purchaser who has applied to the Land Registry for the deeds fails to provide evidence that the purchase price has been substantially paid and the additional penalty of €100 is added for each further day that the vendor or purchaser fails to provide the evidence.

    If the purchaser refuses or fails to pay the transfer fees within five days, the fees are doubled and a memo to that effect will be lodged against the title. But if the purchaser has secured a loan to buy the property, the bank that loaned the money is obliged to pay the transfer fees.

    It would be great if someone could supply a more accurate translation of the article.

  • kufrahdog says:

    Nigel – re yours at 10:05 am.

    Thank you for your comments. The PIMCO Rpt is a most useful reference. KD.

  • kufrahdog says:

    houlou re yours at 10:08 and 10:06.

    Much appreciated.

    I agree your comments about CGT.

    If you consider the entire population suffering from the title deed trap and then slice and dice individual predicaments, it is clear that the Hasikos bill will not be able to deliver a solution to everyone – many, sadly, will be disappointed. This is why it is important for some buyers to plan and resort to other approaches, for example, litigation. KD.

  • houlou says:

    @kufrahdog, I will see if I can get hold of anything

  • houlou says:

    @kufrahdog, problem is the fact that it is a proposed bill, and the crooks will change it to suit them as we all say…

    What astonishes me is Lysandros Lysandrous the CY legal service persons righteous take on the fact that a buyer being held responsible for developers outstanding c.g.t to the state is unfair….surely as this approach to the injustice is applied for this case, it should apply to the developers debts to banks also? developer should be responsible!

    As for your predicament, well mine is similar, and have an additional hurdle no cert of final completion, developer a.w.o.l doubtful if he has monies to resolve building issue and get certificate, if he hasn’t got the funds to pay resolution of this issue , there is no chance he will have funds to pay off his c.g.t etc

    This adds an additional layer of problems, what does it mean for the bank? how will they sell on such a mess of a situation, deedless properties, with no certificate of final approval…in theory worthless!

  • @kufrahdog on 2015/07/13 at 8:45 am – It’s the banks, in part, that created the mess. They didn’t check that the money they loaned to developers was being used for its intended purpose – and rather than declaring the loans non-performing when the developers failed to pay and passing them to their recoveries department to deal with, the nit-wits rescheduled them (a practice that is known as ‘extend and pretend’).

    There’s more in the in the PIMCO report – Independent Due Diligence of the Banking System of Cyprus.

    Basically the banks couldn’t organise a ‘you know what’ in a brewery. Now the chickens have come home to roost and are pecking their botties, they’re crying foul (excuse the pun). IMO the government should have followed Iceland’s example and sent these bankers to jail and sequestrated their assets. Don’t forget that some of these bankers were borrowing money at 2% and then putting on deposit at 4%.

    I’ve been trying to find the draft ‘hidden mortgage’ bill without success.

  • kufrahdog says:

    Nigel and houlou, good morning, re yours at 12:18 am and 07:12 am respectively.

    In my case the deeds (land only, excluding house) have been issued by the Land Registry to my developer and I assume that they have been assigned to his lending bank in connection with the massive mortgage debt he owes to the bank. As I see it, the lending bank will not willingly relinquish the assignment while the developer’s debts remain extant. Currently my land and house combined is a collateral asset of the developer’s lending bank. In addition my developer does not have, in relation to his sale to me, a guarantor, which makes the position worse; and I am sure that my situation is shared by many others, expats and Cypriots alike. One can quite see why the banks would wish to oppose this proposed bill.

    It would help us all to know how this Gordian knot is to be unravelled by having the entire wording of this proposed bill released/leaked to the public domain. KD.

  • houlou says:

    @nigel & kufrahdog morning, Nigel I believe that the developer has the option to apply for the deeds too as well as the lenders, it all in Greek in one article I found, but it states it. Not sure why a developer who has behaved the way he has up until now will want to help his ripped off buyers though? if the land reg head is happy the buyer has paid for property, all parties are notified the article says, and have 45 days to appeal, only grounds for appeal are

    a.purchaser has not paid full price(although this is checked by land regs in previous step!)
    b.the sales agreement is deemed null and void (no idea how this can be the case)

    If there is no appeal then deeds transferred to buyer and buyer has to comply or face consequences of not turning up to pay collect within 5 days of being notified deeds are ready…..

    ALL of the above only applies IF this bill is ever passed as law that is, and yes the PTF is a hefty bill so may have some buyers in trouble……

    Δικαίωμα αίτησης για μεταβίβαση-Δικαίωμα αίτησης για μεταβίβαση του ακινήτου που είναι εγκλωβισμένο μπορούν να καταθέσουν:

    – Ο αγοραστής, ο οποίος κατέθεσε στο Κτηματολόγιο, σύμβαση πώλησης
    – O πωλητής, ο οποίος κατέθεσε στο Κτηματολόγιο, σύμβαση πώλησης
    – Eνυπόθηκος δανειστής, ο οποίος βρίσκεται στη σύμβαση υποθήκης
    – O δανειστής δυνάμει σύμβασης δανείου με τον αγοραστή
    – O διευθυντής, αυτεπάγγελτα σε διαδικασία, η οποία καθορίζεται με Κανονισμούς.

  • @kufrahdog on 2015/07/12 at 11:55 pm – My understanding of the article is that the purchaser has to apply to the Land Registry for the deeds to be transferred. If that application is successful and the buyer refuses to pay the transfer fees within 5 days, they face the penalties.

  • kufrahdog says:

    With reference to houlou on 12 July 2015 at 2:29 pm and Nigel on 12 July 2015 at 1:46 pm:

    “if a buyer refuses to pay the Property Transfer Fee within 5 days, the Property Transfer Fees will be doubled and if the seller or buyer fails to provide evidence of the payments to the Director of Lands and Surveys, a penalty of up to EUR10,000 will be imposed plus a further EUR100 for each day that the offence continues”.

    If these facts have been reported correctly and lawmakers pass the bill with these words unchanged, then the State of Cyprus must expect a proportion of buyers to sue it. I doubt that expat buyers in particular would keep sufficient funds at risk in Cyprus banks just to pay PTFs at short notice; it takes time to transfer sizeable funds from overseas to a Cyprus account.

    I also doubt that this proposed bill will allow buyers prior recourse to pursue criminal or civil proceedings against those developers, lawyers and bankers who deceived them or were professionally negligent, before responding to a demand to pay PTFs. Many of these so called professionals acted to deliberately prevent transfer of title to buyers by for example, the hidden mortgage tactic or the violation of planning and building laws specifically to render the issue of a Final Clearance Certificate impossible.

    My experience of the entire Cypriot establishment is that it is the most corrupt, deceitful and untrustworthy overseas society I have had the misfortune to encounter. It deserves nothing less than to be committed to hellfire and eternal damnation for the unyielding and brutal manner in which it has failed to free those caught in the title deed trap; it has changed the evening of my life irrevocably.

    But I will not give in, nor will the next generation of my family … the fight goes on! KD.

  • houlou says:

    Thanks Nigel, could it be that one of the other reasons for the delay in passing of the bill is the need to find I suppose a less harsh penalty on those who do not come forward to pay for deeds despite having registered intent to acquire them?

    It does seem like a bit of hefty fine, but then again it gives the deed seeker more of an incentive to pay up as requested and on time, and anyone in their right mind coming forward to claim deeds should in theory have the funds for property transfer fees……..

    “if buyer refuses to pay the Property Transfer Fees within 5 days, the Property Transfer Fees will be doubled. And if the seller or the buyer fails to provide evidence of the payments to the Director of Lands and Surveys, a penalty of up to €10,000 will be imposed plus a further €100 for each day that the offence continues”

  • @houlou on 2015/07/12 at 12:28 pm – People are welcome to use my open letter to Mr Hasikos if they wish – and they may also find useful information in the PIMCO report – Independent Due Diligence of the Banking System of Cyprus.

    I note in the article you referred to that the buyer refuses to pay the Property Transfer Fees within 5 days, the Property Transfer Fees will be doubled. And if the seller or the buyer fails to provide evidence of the payments to the Director of Lands and Surveys, a penalty of up to €10,000 will be imposed plus a further €100 for each day that the offence continues.

  • houlou says:

    @Nigel, dear Nigel is there any chance please that you could put together a letter that readers of your site can send to the aforementioned committee members? A letter that highlights the main plight and concerns of all trapped buyers? or can we use your open letter to Mr Hasikos as a basis for such a letter…..?

    I guess it will hinge on a need for a law that will release all trapped buyers without any of the developers debts to state and/or banks burdening buyers in order to release their deeds…

    And also must highlight this conflict of interest where MPS voting for against the bill, do have NPLs and some could be developers themselves ‘on the side’ and so have a vested interest in not supporting the passing of the bill as law, as it will rightly burden the vendor with debts he owes the state/banks…? It makes my head spin that the proposed law is so correct and fair yet these snakes will not vote it as law for the above reasons i.e. it apportions blame to where it rightly belongs…

    I found an article in Greek «Απεγκλωβισμός» με πολλές προϋποθέσεις

    Last section has a statement by the legal service of the govt. that has been sent to the committee and questions the tactic whereby a buyer is denied deeds if the developer have failed to pay his c.g.t, even Mr lyssandros lyssandou of the legal service, said the 2 had to be uncoupled , he mentioned κράτος δικαίου “a just state” has to allow the trapped buyers to benefit from the proposed law whereby the debt that is undoubtedly the developers does not hinder the release of deeds to a buyer……

  • Who Gives says:

    @ We all should not bother wasting our weekend bothering about this long standing fiasco that Cyprus Government are laughing all the going around the houses until TROKIA have no choice to implement another amendment to MoU Rev to show that they have control on the “Fantasy Island”.

  • Rona says:

    @Denton, Finance and budgetary Committee members are:

    DIKO: Nicolas Papadopoulos, Angelos Votsis.

    DYSI: Prodromos Prodromou, Marios Mavrides, Maria Kyriakou.

    AKEL: Stavros Evagorou, Giannos Lamaris, Pambos Papageorgiou.

    EDEK: Nicos Nicolaides,

    Environment: Giorgos Perdikis,

    Lillikas’s Party which is probably called Citizen’s Alliance (not sure), Represented by Nicos Koutsou. I see that the fact that Koutsou was using policemen who were assigned to protect him, as labourers in his olive groves did not put anyone off appointing him in this position.

  • Stuart says:

    @Gary. I totally agree but think you will find that the Troika is well aware of the situation having had it spelt out to them by Nigel some time ago in clear and unambiguous terms and so has introduced clauses in the (latest) MoU to address the issue but the turkeys in parliament have suddenly, or perhaps always, realised they would be voting for Christmas.

    You are also correct in your assertion that there are very close relationships between the banks and the politicians as a result of years of corrupt practice and dubious partnerships. At least Mr Hasikos seems to have finally woken up to the fact that his parliament is trying to protect the banks rather than the buyers but even he seems to be politically impotent.

  • Steve R says:

    Build the peoples hope up and then kick them in the teeth. This has been going on ever since I first stepped foot on this island 12 years ago. A neighbour of mine showed me a newspaper cutting from the Cyprus post about the start of this subject and he was so exited. I will have to how him this post which will really annoy him. This is what it is like in Cyprus. We all have to just deal with it I’m afraid.

  • Who Gives says:

    @ This should not come as any surprise at all the ROC MPs for sure not going to pass this bill as law. Would you if huge amount of the NPLs are with your close friend within Banks, Bar, Council developers receiving there month pocket money in a brown envelope.

    This will of course provide a lavish life style to take Caribbean holidays with their family flying first class while the average Cypriot stays of the island on make believe heads for Paralimni to spend two weeks in there “Luxury Villa” If you know what I mean. Who Gives

  • Denton Mackrell says:

    @Nigel and @Pete: I do not have a complete list of the Finance and Budgetary Committee members as one does appear to be forthcoming from the House of Representatives. However, I have managed to compile a partial list:

    chairman Nicolas Papadopoulos (DIKO)

    Stavros Evagorou (AKEL)
    Giorgos Perdikis (Greens)
    Angelos Vostsis (DIKO)

    Others who have been members but unclear if still members:

    Takis Hadjigeorgiou (AKEL)
    Nikos Nicolaides (EDEK)
    Antigoni Papadopoulou (Democrat)
    Pambos Papageorgiou (AKEL)

    Why the House of Representatives is so shy about releasing the membership list of this committee, and presumably others, I cannot imagine.

    If anyone can identify the missing members, perhaps Nigel will add the info to this posting.

  • houlou says:

    Sad, sickening, Cyprus politics….seems the initial cross party support for resolving the injustice must have been based on a bill that the public hasn’t seen yet!

    I wouldn’t be surprised that in cases of trapped buyers that the state steps in to makes the purchaser liable to pay the developers debts to both state and/or bank…

    Also the initial euphoria including mine over the bill, seemed to make ones mind slip, and forget about the NPLs of those who actually will voting the bill(not) to pass as law….

    Papadopoulos has been very vocal in support for banks and the bringing back of the billions that were given away due to the handover(not sale) of the Cypriots banks in Greece….local banks here took the debts of those Greek subsidiaries and those branches in Greece were left with the all the deposits!(I am not in anyway supporting the finance committees delaying tactics) back to my original idea that a lot of poolside chats will take place between all the crooks, to see how they can twist the bill to suit their needs……

  • @Pete on 2015/07/11 at 1:11 pm – It was the House Finance Committee who decided not to put the bill before the House. It’s chairman is Nicholas Papadopoulos (DIKO).

  • Pete says:

    Why am I not surprised? Is there any way of finding out who voted for the postponement? I’d lay money on it being those with loans or who’ve stood guarantor so once again they bring disgrace to an island already plagued by corruption, greed and every type of avarice known to man.

  • Gary says:

    This should be highlighted at the highest level of the Troika. Cyprus has had it’s chance to face this head on but has decided, and we’ll all have our own views why, to avoid the issue again.

    he corrupt practice of the banks should be condemned and appropriate action taken within the EU. No more waiting around to see if Cyprus can get its house in order.

  • scruffy says:

    Very disappointing. It looks like the inherent corruption is here to stay. Even the Government is questioning the integrity of its own MPs.

    I suppose it was too much to expect. As Peter says, if half the MPs voting are up to their necks how can we expect any other result.

    Unless outside influences intervene I can only see a long hard road ahead for any kind of justice.

    I’d be willing to bet now that we will still be in this limbo next September never mind this September.

  • Pippa says:

    I really suppose we should not have expected anything else. The MP’s are just interested in their own NPL’s and their pockets and not in sorting out this banana republic. Can I assume that the Troika will now with hold the next lot of money? No? I thought not!

  • Peter says:

    Well we have to remember that at least 26 MPs had NPLs, were guarantors for many loans and they are the ones deciding. As if they would vote for a system that puts them in the deep smelly stuff? Or the banks have had a quiet word with them……..

    This is a disgraceful turn of events and it just goes to show that Cyprus is indeed leaning towards its title of being a Banana republic where the elite rule and the people are slaves.

    IMHO, the president should have said something about this and stood up for all those buyers that were wronged by the system/developers/lawyers.

    I guess we shall just have to wait and see now.

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