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Banks playing a dirty game

A number of banks have obtained temporary court orders preventing people who bought property in Cyprus from receiving Title Deeds under the provisions of ‘trapped buyers’ law claiming they knew nothing about the sale.

Cyprus banks playing a dirty gameALTHOUGH many people who were duped into buying property in Cyprus on land that their developer had earlier mortgaged to the bank are receiving the Title Deed to the property following their application under the provisions of the ‘trapped buyers’ law, problems remain.

To their disgust, some purchasers who applied for their Title Deeds have been advised that the transfer of the property they purchased has been blocked because the bank has obtained a temporary order from the court preventing its transfer.

The banks claim that they were unaware that the developer had sold the properties involved because their purchasers did not require additional funds to buy the property and the bank had no knowledge of the sales. The banks are also questioning the constitutionality of the ‘trapped buyers’ law.

We understand that some 30 – 40 of these temporary court orders have been issued.

However, the banks appear to be adopting different tactics. While some have obtained a number of temporary orders, others have obtained just one or two – apparently believing that any final decision will apply in other cases.

Clearly the banks are playing a dirty game in efforts to recover some of the money they lost due to their own stupidity, negligence and unwillingness or inability to manage their debtors; innocent property buyers are expected to pay for the banks’ incompetence.

In one case a purchaser opened a bank account at the same branch as their developer. They instructed the bank to transfer money into their development company’s account as each stage payment became due. Yet the bank is now claiming it did not know the property had been sold!

Readers' comments

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  • Gordon morrice says:

    Sorry tor asking again a question I saw answered by you before but I need to reclaim IPT paid to developers two years ago but now got title deeds transferred and I am zero rated.

    I seem to think you said claim forms of IPT are in Greek but you did a English version to assist filling this form in.

    Can I still get this translation on your web site.

    Ed: The forms you will need are “Ε. Πρ. 303” and “Ε. Πρ. 314“. There is a later version of Ε. Πρ. 314 but I have been so busy on other things I’ve not had time to translate it. (You will need your developer’s help to complete the forms.)

  • s maddox says:

    After reading a lot of to and fro from getting a house in Cyprus I have been looking to buy for 18 months now I would not touch Cyprus with a bargepole they are the most corrupt government I have ever come across they even beat this pile of crap from Britain so goodbye corrupt Cyprus and hello Spain.

    Ed: It is possible to avoid problems when buying property in Cyprus by taking independent legal advice and restricting your search to properties that have already been issued with their all-important Title Deed.

  • sky says:

    @nigel, sorry Nigel but I’ve searched about O’dwyer case in Cyprus mail website…not a word about it…

    Ed: Apologies I posted the wrong link in my earlier reply. You’ll need to register and search through the Cyprus Mail archive as the articles were published quite a while ago. You’ll find a summary of one at Developer found guilty of assault, but you’ll need to register to view the full thing.

  • Peter Davis says:

    Sounds like negligence on the part of the banks who gave out the loan to the developer.

    Bank Manager ….. “Well yes, we realised the loan was to build houses but we never thought he’d sell them….

    Anyway he never asked if he could sell them? I mean, if he was going to sell them and make a profit he should have asked to borrow more money from the bank. No one used the money from the sale of property to pay off the loan…..

    All I can say is this developer can’t be a Cypriot and certainly has no idea of business practices”.

  • sky says:

    @nigel : how come there is not a word of the O’Dwyer story in Cyprus Mail??? It’s worse than the Terry Gilliam’s “Brazil”.

    Ed: The Cyprus Mail carried a number of reports – eg Developer jailed for two years.

  • sky says:

    @ nigel….:D thanks for the link, but I’d rather thought the opposite (i.e. developers being assaulted, which would be fair and logical…:D)

  • sky says:

    just a question…which has nothing to do with the rule of law…but…aren’t there any developer who’s got a “jaw vs knuckles encounter” with the people to whom he sold a property?

    Ed: Conor O’Dwyer spent several days in hospital after being assaulted by his property developer – British property buyer brutally beaten.

    And several people have contacted me saying they’ve been threatened with violence. One was threatened that if he went to the press with his story they would shoot him. Fortunately the individual recorded the phone call which is now in a VERY safe place.

  • embapaphos says:

    In a sharing mood, if Nigel wants to post this? Just for the record my developer is not really the one at 100% fault I have neighbours cause me issues too and of course the banks. My developer secured a loan to start a small build using the plot of land he owned as security. In the meantime, sold me one property off plan and repaid the loan or most of it. He then found additional buyers for remaining properties on the same plot. He arranged with a bank loans for the purchases, security for these loans being the land (all of it). This security though included the portion of plot my property was built on.

    So the developer got his money from the bank and the bank got its borrowers.

    I confronted and complained to bank and developer when I discovered this, and they said this was common practice back in 2006! Developer and the bank then arranged to ‘free’ a portion of the encumbrances that equated to my ‘part’, but I never got this is writing and on speaking to developer he said I should have.

    2 years ago or so developer for other reasons went awol. Top this all off I found out that 2 of the buyers on the same plot had failed to keep up mortgage repayments and bank was taking action against them, so called forced sale appeared on the N50 search. I confronted bank in a civilised way again with all the documents proving my payments to developer and no debts owed to bank. They said there is no way the bank can lay claim to your property if you have no loan or other agreement with us that you are failing to service, but will get back to you with it in writing.

    That was over a year ago and excuses about finding documents from archives etc hence my application via the trapped buyers law….in my case it is other buyers on the plot having caused me woes you see?.

    Bottom line by land reg when I applied, was do you owe developer anything? Do you owe bank anything? if answer is NO and can prove you paid developer we will tell the bank where to go if they come to object to application and transfer of property to you.

    The whole ‘system’ is in dire need of trashing and rebuilding, cut the bureaucracy the state likes and curb the powers of the banks… one day may it may happen when I am pushing up daisies.

  • Steve says:

    Dear Ed, Thanks for clearing up the point about mortgages. Again, it shows that the system is a movable feast.

    I was told at the land office that the 45 days wait is to check for objections to the transfer by the developer and the banks and I thought mortgages were mentioned. As this is not the case, do the banks have any other recourse besides the courts?

    The ethics of what should not have happened in granting and administering the mortgage is never up for discussion by the banks and solicitors involved.

    Ed: Apart from raising objections to the transfer with the Land Registry, the only other recourse is through the court.
    (I’m sure the Land Registry would give them short shrift if they objected).

  • kufrahdog says:

    In my experience I had concrete evidence that my developer’s lending bank, the Bank of Cyprus, had in their possession a copy of the Contract of Sale I wrote with the developer: ergo the bank were aware that the developer had

    1) sold a property to me for which he had been granted a mortgage loan and

    2) had fraudulently stated within the Contract of Sale that the property was free from any kind of encumbrance including mortgages.

    In spite of the abnormal business practices mentioned in the PIMCO Report referenced in the above article, it would be reasonable to suppose that lending banks would impose a contractual obligation on developers to supply a copy of the Contract of Sale when a mortgaged property is sold and that the title deeds to that property be assigned to the lending bank until the mortgage is discharged. Conversely, given the nature of banks and developers, it would also be reasonable to suppose that no such arrangements actually exists.

    In view of the situation described in the article above, I would urge trapped buyers to consider subpoenaing their developer’s lending bank to court and being required to present to the court all documents in their possession relating to the mortgage and sale of the property. While this is not a foolproof approach, it may stack the risk against a bank or developer for whom perjury may be step too far. This was certainly a step considered by my lawyer and I, although circumstances made it redundant.

    The real sadness is that the “trapped buyers’ Law” is only a temporary fix. The Cyprus government and all the institutions involved in property have done nothing to eliminate bad process and practice, and re-engineer the system based on world best practice: until that happens, there will always be a continuing cycle of corruption and disadvantaged buyers. KD.

    Ed: In one case the developer had agreed to make repayments on his mortgage to the as he received money from the properties he was selling. But he made no repayments whatsoever and the company is now insolvent (some of these ‘temporary orders’ have been issued to some purchasers on one of his developments). This came to light after one of the purchasers visited her bank to discover what was happening and the bank manager told her the story.

    So there is absolutely no question that the banks knew that properties were being sold, but proving the case may be difficult.

  • Joe Hunnam says:

    I have applied and am still waiting for my Title Deeds, I bought my property off plan and made stage payments through the same Bank as the well known Developer.

    If I thought for one moment that the Bank was with holding my Title Deeds because they were unaware of the sale then the Banks should be held to account and a criminal investigation into money laundering.
    :Surely:

    Ed: money laundering is the concealment of the origins of illegally obtained money. If you paid your developer with illegally obtained money you would be laundering money, not the bank.

  • embabaphos says:

    Question & answers from land reg: application via law has proceeded to point where I am being asked to pay transfer fees. After paying these fees what are the chances of me turning up on transfer day only to be told that transfer can’t take place? answer : Firstly, depends on each individual case I was told, then:

    Answer 1. if you have got past the 45 day period where objections can be raised means no objection raised (or raised and rejected by land reg) , which enables you to get to next stage of paying transfer fees, so answer is no there is nothing going to stop the transfer to buyer.

    Answer 2 from another land reg person: IF any court order does come into effect, and transfer prevented, and you have paid the transfer fees, you will get refunded.

    Hmmmm maybe a fax to mr.charalambous is in order…to clarify

    Ed: Answer 2 is correct.

  • Steve says:

    In the list of hoops you have to jump through to get title deeds using the trapped buyers law, there is a specific requirement of no outstanding mortgages. There is a simple procedure that has been detailed some time ago on this web site to determine whether a mortgage exists. Granted, it should have been done before the purchase agreement was signed, but in Cyprus knowing how it should be done doesn’t help you.

    There is more to say, however. The brochure produced by the Lands and Surveys Dept on using the trapped buyers law, clearly states that the application form can be submitted at any Lands office in the Republic. If you go into the Paphos Lands office, there is a big notice on the wall telling you that only applications for title deeds lodged in that office will be accepted. If this simple requirement is not being followed as per the brochure, how can you tell about the rest? If you think about getting help, who can you go to? Some lawyers will tell you to abandon the application and make a deal with the developer – money in return for cooperation! Right and wrong and the difference between them hardly exist here any more.

    Ed: There is no specific requirement in the ‘tapped buyers’ law of no outstanding mortgages. Anyone can apply for the deeds to the property they purchased regardless of any mortgages. See Applying for Title Deeds

    Applications can be submitted at and Land Registry office regardless of where the property is located. I don’t know what the Paphos Land Registry is doing?

  • Pippa says:

    Once again innocent property buyers are being punished for paying in full for something they presumed they would own, I like many others have been duped by a corrupt and callous property and banking system that will destroy any hope of seeing Cyprus ever becoming a decent county. Having applied last September, under the ‘Trapped Buyers legislation’ all I want is a clean set of title deeds for a property I bought 10 years ago in good faith, so that I can sell up and leave this corrupt island.

  • embapaphos says:

    Appreciate the feedback, too true what the banks should have done wasn’t done, the state knows it had a part in the mess too. Shouldn’t the state at the time a sales agr. was submitted to land reg have duly informed the duped buyer that what he/she was buying was built on mortgaged land?

    In the meantime I keenly wait (not) to receive the notification that a court order will prevent my transfer too…got over a month to go for this to happen…and because I trust the postal system so much will call the land reg. on a regular basis for updates, in case they have sent such a letter yet I have not received….

  • sky says:

    @nigel, one can’t sue a bankrupt company, but one can sue its owner… I guess the money went somewhere, right? I don’t think those bankrupt developers spent it on souvlakia and frapes…

    And on top of that, those loans made to bankrupt developers were guaranteed by guarantors, right? who are they…?

    So, I think they are many more culprits to sue before suing the banks.

  • embapaphos says:

    Thanks Nigel for taking time in listening to us disgruntled ones.

    Ed: No problem.

  • embapaphos says:

    Nigel, apologies for getting repetitive in previous posts here. I was talking to a banker friend, who said a bank cannot simply deny knowing where a monetary deposit that appears in a developer clients bank accounts comes from (especially if it is property cost size). It is and was the banks duty to question where such funds have come from.

    Suppose the developer could have always been dishonest about this, but then it is up to the bank to take this up with the developer not the duped buyers.

    Still would like to know the land reg stance on this, and how such court orders can be put in place preventing transfer whilst at the same time the land registry maybe asking ‘trapped buyers’ to pay up transfer fees, seems to be conflict between these two or not?? Pay up transfer fees but we cannot transfer is bizarre.

    Ed: Do you really believe the bankers here questioned where the money in a development companies bank account came from or even cared or checked the bank account?

    What they should have done and what did are two completely different things. Try reading the PIMCO report on the Cyprus banking system to get a flavour of what was going on.

    If a court has granted an interim order preventing the transfer of property you will be notified and not asked to pay transfer fees.

  • sky says:

    The crook is the developer not the bank. Selling a mortgaged asset is like selling something which is not yours.

    The buyers should sue the developers not the banks…

    Ed: Unfortunately as we know, lawyers who were in cahoots with the developer failed to protect the purchaser’s interests, while others were just incompetent and failed in their duty of care.

    A few years ago the Supreme Court ordered a Paphos-based lawyer to pay a British couple €120,000 due to his professionally negligence. The situation is virtually identical. See Landmark ruling by the Supreme Court.

    As for the banks, there’s a video on YouTube that sums up my view. Be warned it’s full of offensive language!

    (You cannot sue a company that’s bankrupt)

  • embapaphos says:

    Hmmm would like to get my skates on and get transfer done, but alas have not been told the transfer can take place (unless developer shows) and he is not, but been told to cough up transfer fees within 60 days of having received the letter asking for the transfer fees, if developer is a no show in the 60 days as well, the land reg will do a compulsory transfer to me me in his absence….really wondering if I am in for yet more surprises….

  • embapaphos says:

    Thanks Nigel I quote you “However, rather than objection to the transfer they are going directly to the court and obtaining a temporary order preventing the transfer taking place” this is something that the land registry can tell a trapped buyer of course if they are asked? Worrying thing is even if the court order is not in place within the 60 day pay up transfer fee deadline, it can appear on the 61st when you turn up to get the transfer done to your name, correct?

    Isn’t it blatantly clear to all those at the land registry that the trapped buyers law is failing in these cases? How stupid is it to ask buyers to turn up pay transfer fees but deny transfer as the bank has a court order against this transfer, why pay a transfer fee at all? transfer fees are just that fees for the transfer?

    Ed: The ‘trapped buyers’ law isn’t failing in these cases – the actions the banks are taking are completely outside the provisions of that law. Anyone can apply at court for a temporary order preventing the transfer of title, but they need to argue the case at court – it isn’t an automatic order. Here’s a description taken from the Dept of Lands & Surveys Citizens’ Charter:

    “Any Court before which an action for debt or damages is pending may by an interim order direct that the defendant in such action be restrained from alienating or charging with so much of the immovable property (standing registered in his name or for which he has by law a right to be registered) as in the opinion of the Court shall be sufficient to satisfy the applicant/plaintiff’s claim, in case he wins the case. Such interim order shall remain in force for as long as the Court may decide or until the issue of a final judgement.

    A true copy of the interim order may be deposited with the Lands Office of the District where the affected property is situated on any working day and during all hours District Lands Offices are open to the public (daily from 8:00 to 12:30) together with a memorandum in writing (Form N.54) signed by the plaintiff or his agent or attorney. All prescribed fees are payable on the same day at the Department of Lands & Surveys (see ANNEX).

    The certificate for the registration of such order (N.55) is issued upon the deposit of the order.

    Such orders may be cancelled or amended only by the Court or may also be withdrawn upon a declaration in writing filed by the applicant, his agent or attorney.”

    I received an email from someone just a few days ago. The temporary order was addressed to the director of the Land Registry who notified the purchaser by email immediately.

  • embapaphos says:

    This is bad, @Nigel, at what stage of the trapped buyers application is this tactic being used by the banks? is it during the initial 45 day period? or are the banks throwing a spanner in the works way after this? ie if the buyer has got to the stage of being asked by the land reg to pay transfer fees can transfer day come only for buyer to find that the transfer can’t take place?

    Ed: Currently this tactic is only affecting 30 to 40 purchasers who paid for their properties without the need for a loan from a bank.

    What the banks are doing can be done at any time after they get to hear that a transfer will be taking place (presumably after they receive a letter from the Land Registry advising them the transfer will take place unless they object). However, rather than objection to the transfer they are going directly to the court and obtaining a temporary order preventing the transfer taking place.

    If you have been advised that the transfer can take place, get your skates on and get down to the Land Registry. (Note that if you borrowed money from a bank to purchase the property or if the land on which the property was built was not mortgaged, this dirty game will not apply.)

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