A DECISION of the Larnaca district court banning banks from foreclosing collateralised properties for which courts gave the green light before the new foreclosure law came in effect last year, is upsetting the banks’ plans to tackle non-performing loans.
The ruling which concerns a mortgage deal signed in 1997, for which Bank of Cyprus had a court ruling issued in 2006 ordering the foreclosure of the property, said that the lender was not entitled to send a “type I” notice notification to the borrower informing the latter of its intention to foreclose the property.
“It seems unorthodox if not abusive to use a procedure provided by legislation in order to pursue a result which was already an order by the court,” the ruling said.
“The foreclosure procedure, pursuant the provisions of Part VIA, starts when the type I notification is served,” the court said. “When the notification is rejected, it is self-evident that the procedure triggered by the notification can no longer exist”.
An official of the Cyprus Banks Association said that its members will study the ruling and assess anew the situation.
“We are carefully studying and evaluating the ruling,” Michael Kammas, director general of the business group said on the phone on Tuesday.
As the ruling was issued at the first instance, he continued, “it does not constitute precedence for similar cases” and neither cancels “foreclosure procedures”.
In a first reaction, sources at Bank of Cyprus expressed their concern. “The legal framework is a complete mess,” a Bank of Cyprus source said in a telephone interview. “We now have to assess the situation”.
Last year, the bank announced its intention to test the new, modernised as part of Cyprus’ bailout terms in 2014 before coming into force in August 2015, by foreclosing properties for which courts already issued rulings. Since the start of foreclosures in June, success was disappointing as only a fraction of the real properties foreclosed found a buyer.
Costas Melas, who heads a group representing borrowers, said on Tuesday that banks could still foreclose properties based on existing orders, issued before the new, unpopular law came into effect.
“Banks are at risk” of losing other cases at the courts, “there are thousand lawsuits pending for the foreclosure of collateral,” he said in an interview to state-radio CyBC on Tuesday.
It happens all the time!!!
Blatant Cypriot thieves from top to bottom
Ripped off peoples deposits, now, ripping off homes, what next???
Stay away from this wasp nest Cyprus is the best solution
I thankfully have my title deeds and can sleep at night.I feel sorry for everybody still in limbo with the highs and lows of the legislation changes. The common factor throughout are lawyers and bankers, the very people who caused the trouble in the first place.
Through their lack of due diligence and greed they made a mess and now they are being paid again to tidy it up . This would not be tolerated in any civilised country!!
Most banking procedures in Cyprus have NOT been fair and legal.
“Since the start of foreclosures in June, success was disappointing as only a fraction of the real properties foreclosed found a buyer.”
The banks have been acting unreasonably, the law has reflected this by FORBIDDING them from seizing property based in erroneous contracts.
The best course of action for anyone affected would be to object to the interest and charges and DEMAND a much lower settlement figure.
Thanks Nigel
It’s the quote from the Representative of the Borrowers Group Costas Melas that caught my eye. “the banks could still foreclose properties based on existing orders, issued before the new, unpopular law came into effect”.
Does he mean that this was the situation before this case ruling? Clear as mud methinks.
Ed: It is unclear – we’ll have to wait for developments.
@ Nigel.
Am I missing something here? I thought that the “trapped buyers law” had already forbidden banks to foreclose on properties that had been paid for regardless of prior court rulings. This article would indicate that the banks can still foreclose on properties subject to previous court rulings.
Ed: This ruling applies to court orders that had been granted before the new foreclosure law came in effect last year.
Can they, Cant they ????. What a mess. It was always going to be difficult to foreclose and sell a property that was in negative equity and still didn’t have title. There would also be the small matter of specific performance registered in favour of the buyer. If such a property came on the market I wouldn’t touch it with a bargepole. No wonder only a fraction have sold. This is going to roll on and on until such a time that the property would have dropped to pieces. If the bank told me they were going to foreclose on my property then I would just walk away from it and let it rot.
Only in Cyprus…..