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Developer fined for misleading home buyers

Pafilia Cyprus Property Developers has been fined €100,000 for mis-leading home buyers in a case that focused on the commercial practices that the company used in 2007 when selling apartments to them.

cyprus_apartmentsA REAL ESTATE developer has been slammed with a €100,000 administrative fine by the Cyprus Consumer and Protection Service (CCPS) for misleading buyers who bought apartments but never received their Title Deeds.

The complaint was filed with (CCPS) by home buyers in December 2013. The case focused on the commercial practices which Pafilia Cyprus Property Developers had used back in 2007 in selling flats to them.

The buyers who purchased apartments from the company accused the seller of hiding important information, such as the fact that there were mortgages on the properties already.

This meant that the buyers could not actually get a hold of their Title Deeds until the developer could pay off debts.

In other words, they were not the official owners of the properties they had bought with their own money. But in their home countries, they said, as soon as someone pays for a property in total, they get the Title Deeds regardless of any outstanding balances owed by the developer.

They also accused Pafilia of supplying them with misleading promotional material, said to have included information mentioning that law in Cyprus was based on Anglo-Saxon law.

The company maintains that the buyers were fully informed, citing Pafilia’s own loan for the property which came from the same bank as that of their clients.

The developer also said they had a lawyer go over the details with the buyers, explaining the situation in Cyprus which was different from that depicted in the pamphlets.

Pafilia also says buyers are not impacted in any negative way by not having their own separate Title Deeds, saying that reselling the property is still possible under their current registration with the Land Registry.

The company had been cooperative during the investigation of the complaint, according to the CCPS.

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The full text of the CCPS investigation and decision (in Greek) may be found by clicking here.

Readers' comments

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  • Max says:

    Fined? So people were screwed over but the state got paid? Nice.

  • Peter Davis says:

    Surely the Estate Agent in this case represents the seller, notwithstanding that they are run by the same company. (Developer/Builder & Estate Agent).

    A servant cannot have two masters, in this case the Estate Agent represents the seller NOT the buyer. There is no relationship or duty of care owed to the buyer of property. As long as marketing was not misleading.

    That is why the buyer of property has, and pays for the services of a highly trained and professionally qualified lawyer who looks after the interest of the buyer. Their solicitor will carry out diligent background inquires to ensure the seller has proper title, that there is no lien or mortgage, that the site has been properly acquired and that the area is not subject to land slippage or further development that would affect the right to quiet enjoyment of the property……right?

    As for comments about ‘Cyprus property sales being based on Anglo-Saxon law’ not only did my English and highly trained Solicitor tell me that, but it was even in a newspaper article she wrote some months later. Of course as I now know the sale of property is loosely based on Ottoman Law and incompetence.

  • Christine Maxton Garritty says:

    Please can we now see other Developers brought to face their misleading advertising brought to justice in the same way.

    Hassapis in Larnaca promised a PGA golf course in partnership with Med Golf. Their promotional material showed us the layout of the golf course in close proximity to the properties we purchased depicting restaurants bars shopping malls and many other features surrounding the “golf village” . Instead we ended up with two properties in the middle of nowhere. No sign of the golf course. Many properties unfit for purpose others unfinished not fit for purpose and worth a fraction of the purchase price.

    We are now retired paying tens of thousands of pounds to solicitors trying to prevent us from being made bankrupt by the very banks who released the money to the Developers for properties surrounding a project that never happened.

    We are saying our prayers that this latest judgement is the beginning of the Cyprus justice System realising how such obscene practises in their country have ruined so many lives like ours.

    Ed: I strongly advise that you apply for your Title Deeds. This should help prevent the bank from seizing your property.

  • Johnny Cyprus says:

    The company’s defence stated that the bank that advanced their loan was the same one as the buyers used.

    That was common practice and one might wonder what advantage could the bank have gained from increasing it’s exposure by extending a further mortgage, effectively on the same property.

    Perhaps it was because they were able to repackage and sell these second loans as mortgage backed securities to other financial institutions. Thus providing further capacity for lending to developers that might well be in default.

    When this process finally resulted in the collapse of the banking system, it was possible to sequester depositors money, fold one institution and recapitalise another.

    This Byzantine scene also facilitated the extension of loans to buyers who did not have any reasonable prospect of acquiring title to their property, other than through the discredited ‘specific performance’ procedure.

  • Costas a fortune says:

    This is not unlike the problems buyers have with Alpha Panareti in Paphos. They said the land for St George Hills (said so in brochure) was owned outright! It’s not, it has a mortgage on the land with Alpha Bank. Seems to be the norm in Cyprus and that’s why anybody would be crazy to buy in this once loved now hated island.

    Ed: It is perfectly possible for for a company to own a property outright and have a mortgage on the land. (In fact you couldn’t get a mortgage on any type of real estate unless you owned it).

    I expect that either the developer or the lawyer you instructed when you bought failed to advise you that the land on which the development was being built was mortgaged?

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