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Trapped buyers could lose their homes

The Limassol and Paphos District Courts in Cyprus have both ruled that the trapped buyers’ law, which enabled those duped into buying property built on mortgaged land to get their Title Deeds, is unconstitutional.

Cyprus: Trapped buyers could lose their homesRULINGS by the Limassol District Court & the Paphos District Court that the trapped buyers’ law is unconstitutional will have huge implications for those who have been duped into buying property built on land that developers had previously mortgaged to the bank.

Tens of thousands of people who bought property in Cyprus in good faith will be affected.

The so called trapped buyers law was introduced in 2015 as part of Cyprus’ bailout agreement with its troika of international lenders. Its objective was to transfer properties to their purchasers who, although they had fulfilled their contractual obligations to the vendor, were unable to obtain its Title Deed. Typically this occurred when a developer had mortgaged the land on which he was building or a memo or any other encumbrance has been registered against the property in question and the developer was unable or unwilling to repay this mortgage and other debts.

In Cyprus, like many other countries, a Title Deed is a legal document that confirms the rights of ownership of a property.  Until such time as a Title Deed bears the name of its purchaser, that purchaser does not own the property.

The European Commission’s post-programme surveillance report was highly critical of progress being made on Title Deeds when it wrote:

“The currently dysfunctional Title Deeds issuance and transfer system is deterring potential investors and thus, weighing on the liquidity of the property market. Although some measures were taken to streamline the issuance of Title Deeds for new properties, no new measure was announced to provide for a sustainable system of transfer of Title Deeds.”

What are the possible implications?

In theory the decision by the courts will enable the banks to seize the mortgaged land and all the properties built thereon.

The banks could then sell the land and properties to recover the debt. If the proceeds of the sale exceed the debt, the purchasers affected may receive compensation.

The courts’ ruling is set to have disastrous consequences for Cypriots and foreigners  who were duped into buying property built on mortgaged land by nefarious property developers, lawyers, estate agents and bankers.

Who in their right mind is going to buy a property in Cyprus without its all-important Title Deed? Probably those seeking Cypriot passports and citizenship falling victims to the cheats and liars that still pervade the island’s property industry and legal ‘profession’.

Further reading

Ruling by the Limassol District Court (Greek)

Ruling by the Paphos District Court (Greek)

Readers' comments

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  • Norm says:

    There is no way the Cypriot Government or the Cypriot Courts or Cypriot Lawyers/Accountants will let the Banks Debts to property developers be written off. If that were to happen the Banks would go bust with disastrous implications for the Cypriot Economy.

    How have the Banks treated these Loans in their Balance Sheets not I suspect as potential bad debts. Are they continuing to apply Interest on these debts. Why did the Banks not approach purchasers of property on Mortgaged land to lodge an interest bearing deposit equivalent to a proportion of the value of the land on which their houses have been built. In that way an offsetting deposit would limit any loss.

  • embapaphos says:

    Well Nicosia land reg is forging ahead as normal with the applications they told me.

    Ed: Yes – it’s only those cases where the banks have filed objections at court that are affected.

  • embapaphos says:

    Had no replies from MPS yet, but below is a brief update I got from a legal person:

    Waiting for feedback on land reg to decide if processing of applications continue or are suspended until a decision is made at supreme court level (once cases get there on appeal as it is believed it will go to the supreme court)

    Regarding deeds already transferred via the trapped buyers law & where the there has been no objection from bank during process, there is no sign that these deeds will be affected.

    Not sure what everyone else thinks, but the last statement does imply that where banks have contested the decision that deeds attained maybe affected?

    Ed: See the article I published yesterday afternoon – Why trapped buyers law unconstitutional. In cases where the banks contested the decision to transfer deeds, the deeds would not have been transferred.

  • Chris H says:

    So banks lend money to developers against land the developers have been building and selling houses on. Lawyers employed by people buying these house do not inform buys if there are debts/mortgages etc… on these lands. Developers fail to pay back the monies they have been loaned and taxes as well in some cases.

    How many developers, lawyers and other people in this loop have been prosecuted/investigated, why aren’t the banks seizing the owed monies from the developers thier homes and homes of family members, cars, monies they hold in bank internationally in payment. Why aren’t the police arresting and charging this group of people for fraud etc…

    Yes we all know the answer but we need solutions, so spread the world globally not to buy property in Cyprus without a water tight title deed. We need a high profile test case trial for trapped buyers, with the best set of incorruptible lawyers available (I know this still leaves the court and officials which is worrying) but we need closure, too many years have passed and sadly some people have not survived to see the final solution.

  • embapaphos says:

    Thanks for reply Nigel, will wait and see if I get any replies from a lawyer & mps I mailed….they system was and still is a mockery, the law makers pass laws that citizens are asked to follow, and then these same laws are subsequently dismantled…

  • embapaphos says:

    Gonna contact the odd MP and see what they have to say about how this affects ongoing applications and those who have already secured a title deed via the law.

    Ed: Any decision on how the ruling will affect on-going applications will be taken by the Court (Not MPs). But what you could ask MPs is what the heck they are going to do about fixing the problem with the law.

  • Keith Wallace says:

    Why can’t this ruling not be appealed to the European Court of Justice?

    Ed: It can be once all local remedies have failed – i.e. once a final decision has been made by the island’s Supreme Court.

  • Chris Rogers says:

    Surely this judgement will be appealed to the European Supreme Court. After all some justice for trapped buyers was initiated by the Troika during the Bailout negotiations. This ruling totally negates that deal.

    Ed: Now that Cyprus has exited the bailout, I expect that the Troika has lost much of its influence (but I have advised my contact in the European Commission of the situation.)

    The final local say on this will be made by the Supreme Court and will hopefully be subject to appeal.

    If the appeals fail the case could be taken to the European Court where I would hope the court would balance the rights of those deceived into buying properties built on mortgaged land against the ‘crooks’ and charlatans purporting to be property developers, lawyers, estate agents, bankers etc. who deliberately withheld that fact that the properties they were buying were built on mortgaged land.

  • DenC says:

    So much fraud has taken place in the Cypriot property market and the authorities have done nothing meaningful to correct the problem.

    It seems now that the only new investors that can be encouraged into this market will either be fools or those with dodgy money.

  • Deanna says:

    Thanks for posting the Ch4 video Nigel. Remember seeing it at the time: ten years gone, and still problems.

    Going to see my lawyer this afternoon about a new law passed last week which should, hopefully help things along. My house was paid for in 1990…..

    Ed: Please let me know how you get on.

  • embapaphos says:

    @Nigel,just to follow on from LT’s question – what happens to those who have already secured deeds under the trapped buyers law? or is it too soon to say?

    It is a joke… to be frank I had one senior land reg official telling me the law was full of holes and unconstitutional which begs the question how & why it was passed in the first place?

    Ed: It’s too soon to say what will happen to those who have already received their deeds.

  • george watkins says:

    my wife and I bought a house, in Mandria Paphos from a developer called DNP off plan in 2004 we are still waiting for our deeds.

    We have filed for our deeds with the land registry and have been told that everything has been finalised and that we should be getting our deeds very soon.

    That was two years ago, we have been told that the developer has them, which he disputes. Then we are told the deeds are in Nicosia, which once again the answer is no. We have been told by our lawyer that the land is ‘not’ mortgaged, then we are told that it is. We are wondering if you could enlarge on this this has been going on for eleven years now and it seems like we are no closer to getting our deeds than when we started.

    Ed: I suggest you visit the Land Registry office in Paphos taking your contract of sale and your passport with you and request a ‘Title Search’ – see New title search procedures in Cyprus. This will cost you €20.00.

    The search will show all claims against the properties and it’s straightforward to see if there are any claims such as a mortgage that were lodged before your contract of sale and which therefore take precedence.

    You could also take the receipt you were given when you filed for your deeds and ask what progress is being made.

    (This are things you can do for yourself – you don’t need to pay a lawyer.)

  • LT says:

    What is going to happen to people that got their Title deed through Trapped buyers law? are they going to be revoked?
    is trapped buyer law still enforced right now? I mean, before decision is made by Supreme court.

    Ed: As of last week the Limassol Land Registry were still issuing ‘trapped buyers’ with deeds.

  • David A says:

    Well Nigel, I’m one of those who is obviously not in his right mind as you and I have discussed in the past. Queens Gardens Paphos. Promises and assurances from the very beginning starting with the agent. Almost 5 years and still no deed. Thank you ******. I’m starting to feel the other meaning of “Greek” in this instance. Shame on you ******. Avoidance and lies are a commonality with your company.

  • liz sweeney ryan says:

    My husband and I bought a property in Tala riviera Paphos in 2007.

    The developers name is G&B Hadjidemosthenous LTD. We are keen to sell this property but are unsure how to go about this. We are aware that we must have title deeds for the property before an estate agent will view and advertise.

    We would greatly appreciate advise on the above.

    Ed: I suggest you apply for the Title Deed as described at Applying for Title Deeds (update 17 May).

  • Diane says:

    Would like to know who drew up the law in the first place…… maybe the tea lady? ….and how it got passed without somebody realising it was unconstitutional.. Dont the government have Lawyers to check these things.

    The government and I believe Troika as well , have been aware for at least 18 months that the law was being disputed why haven’t they done anything

    Surely something as important as this should have gone before Judges in the Supreme Court not a judge in a District Court.

    Some people who’s developers have NPLs, have had their title deeds issued since the law came into force, I wonder are they going to be told they are null and void.

    Ed: I met the architects of the trapped buyers law last year who explained to me in great detail how the law should work. There was no hint of any problems at that time and the law would have been checked by the Legal Services Department before it was put before MPs for a vote.

    I would think that the fact that it’s taken the best part of two years before the courts ruled the law unconstitutional means that the decision is very tenuous.

    It will be up to the Supreme Court to rule on the matter and this could be appealed. If the appeals fail the case could be taken to the European Court where I would hope the court would balance the rights of those deceived by the ‘crooks’ and charlatans purporting to be property developers, lawyers, estate agents, bankers etc. who deliberately withheld that fact that the properties they were buying were built on mortgaged land against the ‘crooks’ who deceived them..

  • steve r says:

    I bought an off plan property from an English developer. There was no mortgage on the land but after he built 7 of the 8 properties on the plot he had got 95% of the sales price. He then did a runner with the proceeds leaving the site without electricity, water, drainage or retaining walls. There isn’t a road either just a track that keeps eroding year on year.

    The company has been with the receiver for several years now and he hasn’t done a thing. We tried to get title but he became very evasive, not turning up to meetings etc. The builder has featured on 2 cowboy builder programs and has admitted altering cheques to be paid into his personal bank account not the company. This was on camera and broadcast on TV. Still nobody in the UK or Cyprus have done anything. Over the last 12 years I have had my hopes built up and then knocked down again. Its time to give up now.

    Ed: Are you one of unfortunate people in Nata on the MDE Nest Homes development by Adrian Mills? You need to push the receiver into action. But I expect you’ll need to contribute towards the cost of sorting things out unless you sue Mills.

  • Owen says:

    Unfortunately and I have seen it happening is these developers are using their pals to enter properties and rent them out for cash furnished or unfurnished cash only, property that’s been empty because of litigation the estate agent or developers are working hand in hand. Corruption is rampant from top to bottom developers and their mates can’t go wrong as the place is full of empty properties in fact thousands this is going on right now on a epic scale..disgusting

  • Molliemoo says:

    Our properties are in the hands of the Receiver, so I assume I’m well and truly stuffed now.

    The Receivers have already been obstructive in allowing some owners to sell, although one owner has managed to be successful, so I supposed this gives them a valid excuse to prevent any future sales?

    I’m getting on a bit now and can only think this will never be resolved in my lifetime and perhaps my son’s inheritance will go out of the window.

    Ed: A friend’s house was in the hands of the receiver. He’d been trying to get the deeds for 15 years and featured in the Channel 4 Andrew Winter investigation in 2007:



    He managed to get his deeds last year using the trapped buyer’s law.

  • Deanna says:

    Can this not be taken to the EU Courts?

    Ed: Eventually yes. But before doing so all ‘local remedies’ must have failed. So these rulings will need to be appealed in the Supreme Court and if those appeals fail, the case can be taken to the EU courts.

    If the case does go to the European Court where I would hope the court would balance the rights of those deceived by the ‘crooks’ and charlatans purporting to be property developers, lawyers, estate agents, bankers etc. who deliberately withheld that fact that the properties they were buying were built on mortgaged land against the guilty parties.

  • sky says:

    Hereunder a quote from a CM article (dated May,26th)

    “The governor of the central bank said that the Cypriot banks have made insufficient progress in reducing non-performing loans adding that the supervisor is working on proposals to render the existing legislative framework more effective to speed up the process.”

    The governor said that amendments included in the law aimed at protecting borrowers.

    “I don’t want to sound that I am defending banks, but a country without healthy banks, cannot have a healthy economy,” Georghadji added.

    I think this is clear enough…

    The money lent is going to get back to the banks…willy nilly…

  • Kal says:

    Presumably these Trapped Buyers were not made aware of the fact that the land was mortgaged at the time of purchase. This is negligence and a failure of the lawyer handling the purchase to protect his client. Perhaps these lawyers should be sued in the event that the bank takes ownership of the property. I am sure that a lot of pressure will suddenly materialise to get the problem sorted.

    Ed: The fact that the properties people were buying was mortgaged was deliberately withheld – and I prefer to call this law the ‘hidden mortgage law’. No-one in their right mind would buy a property knowing that the land it was built on was mortgaged.

    Many thousands of people, both Cypriot and foreigners, have been duped into buying property on mortgaged land by the ‘crooks’ and charlatans masquerading as property developers, lawyers and estate agents.

    There has been one case where a lawyer was successfully sued for negligence. The property had been mortgaged twice, an interest had been registered on the property, while the contractor went bankrupt.

    It took the couple TEN YEARS to get justice. You can read more about the case at Landmark ruling by the Supreme Court.

  • Pippa says:

    Joanne, I have come to the same conclusion, we too have paid in full. No idea who the developer has the loan with but know he is in debt.

    It is nothing but fraud, however as none of the numpties in the government here have any interest in sorting out the problem, and the EU appear to have washed their hands of Cyprus we will be at the mercy or the banks.

    However as an aside, I cannot see any bank wanting a load of properties they cannot sell and a lot of homeless expats, as it seems to be us that are making the most fuss, making headlines all over the world.

    Ed: Headlines all over the world will help shame the Cyprus government into sorting out the mess – and they also serve to warn those considering buying property in Cyprus of the risks and potential problems they may face.

  • sky says:

    Hum….
    Once the “trapped buyer law” passed, I was wondering how the banks would be able to handle 50% of NPLs…I’ve got the answer now…they are going to get their money back, by hook or by crook, and as after the bail-in, people will demonstrate for a while, cry a lot, then things will get back to normal…

  • Joanne says:

    I know we most probably wont get the deeds i just want to live in fear yet again of having the house taken off us.

    Ed: What you could try is visit the bank and see if it is willing to issue a waiver from the developer’s mortgage.

  • Pippa says:

    Until the issue effects politicians or those who have influence over them then they have no motive for doing the right thing. Many Cypriots I know are still not bothered whether they have title deeds or not and cannot understand what the, mainly, ex-pats are on about. I despair for this country. Like many we have applied under the Trapped Buyers Law for our title deeds and not face an uncertain future not knowing if we will ever have them.

    Ed: I’m sure the ruling will be appealed and I’ll let everyone know how things develop over the coming weeks.

    In the meantime what you could try is visit the bank and see if it is willing to issue a waiver from the developer’s mortgage.

  • Joanne says:

    So the fact that we applied under the trapped buyers law 15 months ago having paid in full means nothing then. We thought at the time that would be the final hurdle in obtaining the deeds. How wrong could we be yet again. Is there to be an English version if the court ruling please.

    Ed: There isn’t an English version of the ruling, but an honest lawyer is working an English summary. As soon as I have it I’ll update the article. From what I’ve heard the Limassol Land Registry is still transferring deeds but I don’t know what’s happening in Paphos. I expect that the courts will have to issue an order to the Land Registry to prevent them transferring Title Deeds to trapped buyers.

  • Gary says:

    Surely it is a matter of parliament fixing the law. The intention has not changed to protect buyers in this position. I have paid thousands since the act was passed supposedly protecting my interests.

    Ed: Someone needs to fix the law. The problem is that now the troika’s influence has diminished there may be little appetite to do so. And we need to consider the vested interests of MPs.

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