THE DECISION of the House Finance Committee not to put the ‘hidden mortgage’ bill to a plenary meeting of the house before the summer parliamentary recess has been slammed by Interior Minister Socratis Hasikos.
The bill, which was submitted by the government in June, is designed to resolve the situation where those who have bought property are unable to get its Title Deed because the land on which their property was built was mortgaged by the developer who is unable or unwilling to settle the debt, or the transfer has been blocked because the developer owes taxes to the state.
But despite MPs agreeing that these trapped home buyers should be protected, the House Finance Committee decided not to put the bill before parliament for a vote before the summer recess; the delayed ‘hidden mortgage’ bill will now be debated and voted on at an extraordinary plenary session of parliament to be held on 3rd September.
The ‘hidden mortgage’ bill enables the buyer or the seller of the property (who has deposited the relevant contract of sale at the Land Registry), the mortgagee of the property, the lender under the loan agreement with the buyer, the director of a committee to be established by the cabinet, to request the transfer of a property to its purchaser.
The Director of the Land Registry will then review the transfer request and may request evidence enabling him to decide whether the request is legitimate. If the ‘trapped buyer’ has not paid the full sale price, the Director will invite them to deposit the balance of the purchase price into a special account.
(The actual evidence that may be requested and the procedure for opening a special account to hold any remaining sale price is to be established by the cabinet.)
If a person does not comply with this request for evidence within a specified period, the Director may impose a fine on them of up to €10,000 and a further €100/day until the requested evidence is supplied. But before imposing a fine the Director will advise them of the reason for imposing a fine and request that they make representations to him within 30 days.
Interested persons – the buyer, seller or mortgagee, and those with encumbrances and prohibitions may complain to the Director in cases where (a) The buyer/seller have not completely fulfilled their contractual obligations or (b) the contract of sale between the buyer and seller is invalid.
Assuming all goes well, the Director will invite the buyer to pay the Property Transfer Fees within 30 days. If the buyer fails to pay the Property Transfer Fees within 5 days after the 30 days, the Director will transfer the property into the name of the buyer and will lodge an encumbrance against the ‘new’ title for twice the Property Transfer Fees – or if the purchase is the subject of a loan, the lender may pay the transfer fees.
‘Hidden mortgages’ may be transferred to other property owned by the seller or guarantors. (I understand that the Association of Cyprus Banks objects to this claiming that it will cost the banks €1 billion.)