SINCE my comments concerning the draft bill designed to protect ‘trapped buyers’ from losing their homes despite having paid for them were published in the Sunday Mail, it appears that Interior Minister Socrates Hasikos has had a change of heart.
The draft bill, which enabled Title Deeds to be issued to property buyers who purchased property from nefarious developers who had built and sold homes on land that they had previously mortgaged to the bank and who are now unable or unwilling to repay the debt, contained a flaw; it only applied to around 30,000 properties that had been issued with their Title Deed.
This left the buyers of a further 48,000 homes, which have not had their Title Deeds issued, at risk of foreclosure.
It appears that this ‘hole’ in the bill has been resolved. At yesterday’s joint meeting of the House Finance and Interior committees, Socrates Hasikos announced that the buyers of these 48,000 properties would also be protected from foreclosure.
The draft bill will be discussed by a special plenary session of parliament on Thursday (3rd September) – and there may be some changes to the draft discussed and agreed before a majority of MPs vote it into law – and then President Anastasiades has to give his assent.
Demetra Valianti Plati from the Association of Cyprus Banks has complained that the bill will leave the banks exposed, but Mr Hasikos has invited the media to speak with the presidents of the Cyprus Banks to see if they are concerned.
Although it may be possible for a bank to submit an objection to the issue of a Title Deed to a ‘trapped’ buyer, a representative from the Central Bank reported that if the banks knew about the sale of the property or gave a loan guarantee, their objection would be rejected.
However, there are a small number of cases (between 5% and 10%) where the bank will be entitled to object as it did not know about the sale. These cases would include cash buyers who did not require a loan from the bank. But even if the banks raise objections in these cases, there is no guarantee that they will be successful.
(On the last point, the banks must have known when monies from the sale of property were deposited in the developer’s bank account?)