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Some relief for trapped buyers

Although the ‘hidden mortgages’ bill is a positive step in the right direction, more needs to be done to resolve the issue of trapped buyers to enable those who have paid for their property to obtain its Title Deed.

title-deed-issuesTHE government bill allowing the issue of Title Deeds to those who bought property from insolvent land-developers on previously mortgaged land is a step in the right direction, although more needs to be done to iron out more particular problems, property expert Nigel Howarth told the Cyprus Mail on Friday.

Such ‘trapped’ buyers have found themselves at risk of losing their properties in recent years despite having paid for them, since several developers defaulted on their loans, which were backed by properties they had since sold to unsuspecting buyers.

In the wake of the enactment of tougher foreclosure rules, parliament voted to suspend implementation on such special cases until 5th September, with the government hoping to pass the bill two days earlier.

“From what I hear, it’s a positive step in the right direction,” Howarth said.

“My understanding is that it only applies to properties for which Title Deeds have already been issued, so the rest of the cases need to be covered before the foreclosure ban is lifted. Which means, of course, that the ban – which expires on September 5 – should be extended until a comprehensive solution can be found.”

According to Howarth, cases in which no Title Deeds have been issued for the property are not covered by this proposal.

“The Land Registry is going to have a problem in these cases, because it won’t be able to calculate how much of the mortgaged property should be released,” he explained.

“Say, for example, that a developer has mortgaged a piece of land, on which he has built six houses of different sizes, of which only one has been sold and the buyer is now ‘trapped’. If there’s no Title Deed, how will the Land Registry calculate what part of the original mortgage should be removed or transferred to the developers’ other assets?”

While all parties have voiced support for the bill, most pointed out weaknesses and areas for improvement.

AKEL spokesman Yiorgos Loukaides said the party is willing to support the bill, provided its proposal to extend protection from foreclosure to all trapped buyers who honour their contractual obligations – i.e. have not missed loan repayments.

The Greens deputy Yiorgos Perdikis said one of the crucial issues that need to be clarified is the role of the Land Registry’s director, whom the bill names as having the final – and sole – say on approving or rejecting applications.

And Citizens’ Alliance deputy head Stelios Americanos said the law must not only cover those who have submitted the deed of sale to the Land Registry, but everyone who can demonstrate that they have paid for the property in full.

Readers' comments

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  • Adam Lomas says:

    In response to Martin’s comments on “outrageous fees for liquidation” the following may help.

    We are currently in a similar situation and dealing with the official liquidator – CRI.

    As far as I am aware CRI seem to be the only currently licensed official liquidator, and as such he has a monopoly.

    I spoke several terms with Yiannis (CEO) and he agrees it is a ridiculously high fee, and even advised the government not to set such high tariffs. He was ignored and these fees have been set by the government.

    In our case he agreed that we could “negotiate”.

    However since giving all the papers to the liquidator as required, nothing has moved, the bank (in this case Alpha) has refused a meeting to discuss what is supposed to be owing.

    We hope sincerely that the government will move to force the Banks to disclose and discuss.

    Again in our case we found the banks records were very poorly maintained and in some cases actually wrong.

    (Editor’s comment: There are several liquidation companies of which CRI is one. There have been some recent changes to Cyprus insolvency laws aimed at streamlining and modernising the existing system.

    The lack of movement, which you and others are experiencing, may be due to the impending new law.)

  • Martin says:

    Re Editors comment on “Martin says” August 31 at 10:06am.

    Nigel, 11% of the purchase price, that’s a completely new one to us and it’s outrageous, the purchasers have all paid in full and have done nothing wrong, why should they have to pay the Receiver? Right now, as far as we know, the company isn’t being liquidated.

    (Editor’s comment: Martin, get in touch with me via the contact page with the name of your developer and I’ll see if I have any information.)

  • Martin says:

    Until this bill actually gets passed, with the inevitable “protecting vested interests” amendments by the opposition parties, it’s hard to judge what use it will be to most of us trapped purchasers. However, it is looking like the usual “half a job” so far !

    Does anybody know how we stand regarding Title Deeds, on an unfinished development with huge encumbrances, all of which post date our contract registration by some years? The developer no longer exists either, there is a Bank appointed Administrator who doesn’t appear to have done anything in over 3 years.

    (Editor’s comment: The liquidator should do the work necessary to get the deeds issued and the encumbrances lodged after your contract was deposited will not prevent you getting title – but you may need to apply to a court to have those encumbrances removed. Also the liquidator’s charge is normally around 11 percent of the property’s purchase price.)

  • UBoat says:

    So why cant the plots be caculated seperately ?
    Sureley you can. take the example of the 6
    Each house build area is known covered and total area. They know the size of the origional.plot and the ammount owed to who ever by the developer. Then they work out the percenntage of each new plot and this same percentage of the money owed. Surely they then have the correct ammount then owing foe each plot ????
    Or is that to easy ?

    (Editor’s comment: One of the problems with the draft bill is that it requires the director of the Land Registry the to investigate the “existence of the registered title of the property.”)

  • scruffy says:

    @ Nigel – How can it be so difficult for the LR to assess the allocation of an outstanding developer mortgage to each buyer. The bank did not have any difficulty in assessing the figure. All they did was quote the outstanding developer’s balance and divide it between the amount of properties on the project. No complicated, fandangled surveys involved there. If they can bypass all the alleged “necessary procedures” when it suits them then I dare say they can do so with their new found discretions. If I had paid the sum the bank quoted me in order to free me from their claim on my property would the LR have intervened because I was getting ripped off. I doubt it.
    If this law goes through as is, will it not be the case that, even if you can’t get hold of deeds from the LR any time soon, your home will be protected from the bank and you will be recognised as the “legal owner”.

    (Editor’s comment: The key problem is in the draft bill, which requires the Director of the Land Registry to investigate “the existence of the registered title of the property.”)

  • John Evans says:

    The Land Registry will only issue deeds to a property unencumbered by debt, therefore if money is owed, no Deeds. Making this totally meaningless legislation. It will only apply to what must be rare cases of fraudulent sales of re-mortgaged property with Title Deeds, without clearing any new debt. More smoke and mirrors!

    (Editor’s comment: John, that is incorrect. Title Deeds can be issued even though the property is encumbered. BUT the deed cannot be transferred until any pre-existing encumbrances have been removed.)

  • @Who Gives on 2015/08/30 at 7:55 am – As I said to the Cyprus Mail, the Land Registry is going to have difficulty in assessing how much of a developer’s mortgage to move, etc. for properties that have yet to be issued with their Title Deed.

    The draft 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. (But a property can only be transferred once its Title Deed has been issued.)

    To assess the mortgage to be moved accurately individual properties will need to be surveyed and currently there are some 48,000 properties that have yet to be issued with a Title Deed.

    And there will be other properties that breach planning regulations as well as being encumbered by ‘hidden’ mortgages. So although it would be possible to move the mortgages from these and other properties, it’s going to take a lot of work!

    (What normally happens is that Land Registry (or licensed) surveyors visit each new property and carries out an accurate survey as part of the process for issuing Title Deeds and the properties area is shown on the deed. Also during this process all mortgages on the existing property – i.e. the larger plot on which the properties are built – are accurately matched up and allocated to the newly created properties.)

    And there is another law in place that prevents the foreclosure of these ‘hidden’ mortgages properties, but this expires on 5th September. This will need to be extended until a comprehensive solution can be found.

  • Deanna says:

    Totally agree with Yiorgos Perdikis….. “one of the crucial issues that need to be clarified is the role of the Land Registry’s director, whom the bill names as having the final – and sole – say on approving or rejecting applications.”

    We all know what will happen if this scenario is enacted.

  • Who Gives says:

    @ Nigel my understanding this bill for trapped buyers was suppose to cover everyone who
    have purchased a property in full but the title deeds have not issued due to unforseen Developers encumbances. This law will only benefit the buyers who title deeds have already been issued by the LRO but not transferred over to the rightful owner of the property?

    We were all led to believe that thie bill would resolve the title deeds fiasco that thousands of other people like me who have paid for their property in full will still continue to wait in hope of a title deeds to safe guard there property as the rightful owner. Once again another load of hot air from a third world country.

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