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How can Cyprus banks justify their action?

Cyprus banks are blocking trapped property buyers getting Title Deeds, while in Spain the Supreme Court has ruled that the banks must refund money to purchasers whose homes were never completed.

Cyprus banks justify actionDURING the property boom in Spain, in the region of 100,000 British buyers invested an estimated £2 billion in off-plan properties that were never finished and when (like Cyprus) the property market collapsed in 2008, many property developers went bust.

For the past eight years many of the investors have been fighting through the Spanish courts to recover their money.

In a landmark ruling by the Spanish Supreme Court in 2015 financial institutions such as banks and building societies were held liable, together with builders and property developers, to refund money to property buyers whose properties were not completed.

Following the landmark ruling, in December 2016 a court in Malaga ruled that the Banco Popular must repay a British couple the €227,000 they invested in a two-bedroom flat in Los Lagos de Santa Maria Elviria, near Marbella.

Meanwhile in Cyprus

Similar problems exist in Cyprus, due to the banks reckless lending practices as highlighted in the Independent Due Diligence of the Banking System of Cyprus produced by PIMCO in 2013. However, rather than repaying money people invested in property whose developers subsequently went bust, the banks are trying to liquidate those properties to recover the debt.

In 2015 parliament enacted the ‘trapped buyers’ law, which enabled people who had been duped into buying property built on land that the developer had earlier mortgaged to the bank, to apply for their deeds. At that time it was estimated that 78,000 ‘trapped buyers’ might benefit from the new legislation.

According to a report by the European Commission, by the end of August 2016 The Land Registry had received 11,000 Title Deed applications, nearly 4,000 Title Deeds had been issued which led to approximately 800 transfers.

But the banks challenged the ‘trapped buyers’ law in court claiming that it was unconstitutional. District courts upheld their challenge and the situation remains unchanged until further notice; trapped buyers remain trapped.

The banks, whose reckless lending practices helped precipitate the collapse of the island’s economy that resulted in the haircut on uninsured bank deposits and the death of Laiki bank, are now pursuing the victims of their own mistakes; trapped buyers.

How can the Cyprus banks possibly justify their despicable action – how many more innocent lives do they want to wreck?

Readers' comments

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  • Dave D says:

    Nigel,
    On 9th Jan this year I wrote I had not met anyone who had recently obtained their Deeds, to which you replied ‘ Last year a total of 16,110 pieces of property were transferred to their new owners. Just a bit confused as in the above article it states there where nearly 4,000 Title Deeds issued and approximately 800 Title Deeds transferred?

    Ed: The 16,110 figure is the total number of transfers – the 800 refers to trapped buyers transfers.

  • cab says:

    The difference between Spain and Cyprus is that Spain can see the long term benefits of clearing up the errors and wrongdoings of the past in the property market and benefit from people wanting to buy property NOW!

    Whereas Cyprus wants to carry on as if nothing wrong has happened “nothing to see here” and happily deny and even continue with many of the archaic and even corrupt practices in the property market ignoring what foreign buyers read in the press about the Cyprus property market. I’m sure that the Cypriot government and the property developers with a cousin who’s a lawyer and has another cousin who’s an estate agent who are related to someone in the Paphos planning department truly believe that everything will return to the way it was and Jason will return with the Golden Fleece again.

    So there’s no need to draw a line in the sand and regulate in favour of foreign investors no need to guarantee their purchases no need to promote the benefits of the island in order to compete with the welcoming Spanish who are clearing their unsold properties while in Cyprus the villas lay empty for the seagulls to roost. Let’s just wait and see just remember the old handshakes not the new rules and watch the property stagnate on Cyprus.

  • Jill says:

    This is terrible news. Once again, Cyprus proves just how corrupt the system here is. You can be a developer, borrow millions from a bank and not pay it back with no come-back. If you’re an ordinary person, honest, paying up-front for a villa, then they can do whatever they like with you.

    Surely, the European Court of Human Rights should be aware of all this and should have the muscle to sort this out. However, having gone to them ourselves already and getting nowhere, we’re assuming they’re just not interested.

    Totally agree with ‘Tearing my hair out’ – those involved should be hunted down and made to make reparation.

  • scott stanfield says:

    This is the real Cyprus, the most racist, sexist, corrupt country in the EU. If any one from any where is thinking of moving to live in Cyprus permanently, don’t do it, you will regret it, don’t even consider buying a property here, it will literally ruin your lives and please don’t go on about how nice the locals are because they aren’t, they will rob you, happily knowing that the police, courts, legal and judicial system in this fiefdom is just for them, not for the rotten foreigners that come here.

  • john says:

    It’s time the European courts dealt with all this corruption in Cyprus. Tomorrow never comes in Cyprus!

  • Celia Allan says:

    Hi Nigel – How do property owners know if the banks have have obtained a temporary court order stopping the transfer of title deeds, would the Land Registry inform people.

    Ed: If the bank has obtained a temporary court order, the Land Registry (or the Bank) will notify you.

  • Deanna says:

    Thank you for re-instating me – but I don’t know how I became ‘unsubscribed’. Another of life’s great mysteries.

    Ed: I haven’t re-instated you Deanna – you’ll have to visit the Newsletter page and enter your details again.

  • molliemoo says:

    How do we know if our case has been affected? Its is nearly 18 months since I applied and have heard absolutely nothing.

    I enquired at Paralimni LR and told it had been moved to Larnaca LR and the lady would get round to it when she had time!

    Ed: If the bank has obtained a temporary court order, the Land Registry (or the Bank) will notify you.

  • Tearing my hair out.. says:

    The banks in Cyprus will continue to justify their despicable action for one simple reason. They ARE despicable!

    The Cyprus legal system now needs to step up to the plate (finally) and force the hand of the banks. It’s a given they will not do it by themselves.

    Meantime – in the light of the tragic news about Philip Davis last month – every British trapped buyer has their own duty of care to raise this issue wherever they can and lobby media and government alike – shining a strong light on it for the entire world to see just how bad de-regulated fiscal practice can get (with ‘dubious’ legal – and other – assistance) and to push for outing and punishing those involved in architecting the worst and cruellest excesses of it. Most of them will still be at large (though I’m sure keeping a ‘low profile’). However – just like war criminals they can – and must – be hunted down.

    There can be no more false vanity and ‘hidden shame’ if you are caught up in this issue. It’s a monstrous travesty of justice and must be rectified. Every person affected and terrorised by it has known this from day one.

  • Phil says:

    Don’t compare Cyprus with any other country, in or out of the EU, its law unto themselves.

  • Gavin Jones says:

    Not that it’s required, yet more proof that major institutions and commercial enterprises, judiciary, banks and developers, continue to operate along Mafia lines, with the state condoning such behaviour with their lack of action.

    “Abandon hope all ye who enter here”, with due acknowledgement to Dante Alighieri’s Divine Comedy when it comes to buying real estate in Cyprus. And ‘tragedy’ is more apt in this context.

  • stanno says:

    Bad news again. Cypriot thieves all the way down. Glad to hear there is a group of people advising the Chinese to stay away from this wasps nest stinging island. Firstly they robbed innocent people’s deposits which has devastated lives in Cyprus and abroad and they still continue to come out on top with failure to furnish innocent people’s tittle deeds. This continuous theft surpasses the Mafia and other small organizations.

    Cyprus should be placed on the top of the list for the worst most undesirable place to live.

    Anyone having anything to do with this island which was my birthplace is trapped on a spiders web and ready for someone to have a feast.

    As I commented before, they robbed the Arabs, English, Russians, Chinese, and all Cypriots living abroad.

    Cypriot Embassies should also be kicked out from all countries.

    Get out now!!!!!

  • Deanna says:

    Btw have noticed I don’t get the CPNews emailed any more; have you stopped it?

    Ed: I’ve checked, you’re no longer on the list of subscribers. Maybe you forwarded one of the emails to someone who then clicked on the unsubscribe link?

  • Deanna says:

    Well, this is a pretty shocking read: they kept that well hidden didn’t they? Thanku Nigel for exposing yet more injustice for unwary buyers.

  • Celia Allan says:

    Does that mean that all the outstanding applications submitted to the Land Registry from September 2015 to obtain title deeds has been put on hold and none are being issued.

    Ed: No – the only cases on hold are those where the banks have obtained temporary court orders preventing the transfer.

  • scruffy says:

    When you say “the situation remains the same”, what exactly do you mean? I understood that this judgement had been passed by a district court and that the judge had merely stated that the bank may have a case in regard to whether the law was constitutional.

    Surely this is a far cry from declaring the law unconstitutional.

    Nothing has been heard since as far as I am aware.

    I remember that you yourself once stated that it was “highly unlikely” that the government’s legal eagles would have been uncertain on whether such a law would be unconstitutional before issuing the decree.

    Was the case not referred to a higher court?

    Are you saying that the “trapped buyers law” no longer applies until this happens and that banks can go ahead with liquidations meantime?

    Being in the process of selling my property at the moment, through dealing with the estate agents and indeed my lawyer, it is not apparent to them that buyers are still trapped.

    If the banks are confident in their legal challenge why have they not taken it further or indeed why have the property owners affected not taken this legal challenge further?

    Ed: In cases where the banks have obtained temporary court orders preventing the transfers, the district courts will have agreed with their argument that the law was unconstitutional – so the trapped buyers remain trapped.

    I expect these decisions will go to the Supreme Court (who knows when). And if the Supreme Court agrees with the lower courts ruling, I can see this going to the ECHR or the ECJ. If/when that happens the ECHR or ECJ will (should) consider the rights of buyers and the banks when making its ruling on the matter.

    How long all this will take is anyone’s guess.

  • CostasApacket says:

    By now everyone should realise that the group of usual suspects in Cyprus who urinate into the same receptacle set out to scam as many foreigners as possible using Cypriot property sales as their chosen vehicle and this group included the Banks as a key member.

    This latest action by the culpable Banks just further reinforces this belief.

    Latterly the Chinese are also finding this out.

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