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New obstacle to solving Title Deeds mess

Solutions to the Title Deed mess resulting from court decisions declaring that the ‘Trapped Buyers’ law is unconstitutional will be the subject of a meeting between all parties on 16th June.

Title Deed messTHE STATE Legal Service is considering its next moves after a court ruled that the law designed to help so-called trapped property buyers obtain Title Deeds clashed with the constitution.

State attorney Theano Mavromoustaki told members of the House legal affairs committee on Wednesday that no final decisions were taken and a new meeting with all parties involved was scheduled for June 16.

The 2015 law aimed to sort out the mess created by the failure to issue Title Deeds to thousands of people who had paid for their property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.

“There is no final decision on whether an appeal will be submitted,” she said.

Mavromoustaki said the Legal Service was leaning towards discussing changing the law while the attorney-general was against continuing to enforce the law before decisions were made.

Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gave lenders a claim on people’s properties that had been mortgaged by developers.

The 2015 law grants the head of the land registry the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions.

The bill had been contested by banks from the onset and a Paphos district court upheld their position two weeks ago that the power given to the head of the land registry was unlawful.

The appeal was filed by Alpha Bank against a Paphos developer and a British couple.

The court said the law violated Article 26 of the constitution, which affords individuals the right to enter freely into any contract.

It also said lawmakers have no right to intervene in contracts that preceded the law.

Ruling Disy MP Demetris Demetriou said his party wanted to come up with a bill that would overcome the constitutional issues raised by the courts.

Demetriou said 14,000 applications had been lodged after the law was passed with 2,500 already fulfilled and 3,500 being at the last stage.

Readers' comments

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  • embapaphos says:

    @Ed. thanks, hopefully those reforms will make property purchase and building a lot less of a pain.

  • embapaphos says:

    @scruffy N ed, a lot needs to change…Nigel has had meetings with the relevant people in the past, someone needs to drill into their heads that change is long overdue. Banks have been bitten and as far as I know not handing out loans willy nilly now, more controls on developers and who can become one needed, and more transparent speedy issuing of fewer permits needed for projects.

    Key thing is no clean deed transfer no payment or full payment…Time to start nagging the minister of the interior on this all.,

    Ed: Fundamental planning reforms are underway to rationalise: Planning and Building Permits, Certificates of Approval, the enforcement of building control, the issuance of Title Deeds; they will also include the oversight of projects and take into account environmental considerations.

    The Interior Ministry announced plans on its website last November. and the new Interior Minister, Constantinos Petrides, is continuing with the work according to a report in today’s Cyprus Mail – although it isn’t his initiative as the paper reports.

  • scruffy says:

    @Embapaphos & Nigel

    Is it not the case that the new Specific Performance law that allows a buyer to pay the developer loan that relates to their plot is subject to the Bank’s approval and agreement if the loan precedes the date the law came into force. (2011)

    If this is true, I would imagine that there will be thousands with loans that preceded that date.

    The banks are hardly likely to agree to this when they can take the property in order to pay off the debt and make a huge profit at the same time.

    Perhaps the government would be better amending this law by ensuring that the bank must agree to accept payment of the developer loan regardless of whether or not it preceded the date the performance law was enforced.

    Ed: It has always been possible to repay the developer’s debt relating to a plot. The 2011 change allowed purchasers to repay the debt without the agreement of the developer.

    But even with the change in the law, it still relied on lawyers to advise their clients of the debt.

    Yes – the law does need to change and the sooner the better.

  • Geoff Smith says:

    2,500 issued, 3,500 at the last stage. Means 8,000 are in limbo.

    And this in an EU Member State.

  • embapaphos says:

    Nigel in the cases of liquidation the trapped buyers law stopped them in their tracks correct? If we are back to square one again (and I am only guessing what will happen pending the amendments to the law this week) it will mean that a developers debts will be transferred to sold properties that he built on land that was mortgaged?. Only option remaining for buyers being that of following the specific performance route and pay off the developers debt to bank OR allow the repossession/liquidation to take place…..

    Let’s hope they see sense and don’t allow other major issues like the national health service (lack of it) to shadow this issue too.

  • embapaphos says:

    @Serious Fraud Office , don’t local laws of the land override that of EU law? and I take nothing away from what you stated but the legal services are taking a defeatist approach on the matter so far, I hope their agenda is not yet again protect their developer/banker buddies

    If Nigel can check out this article: Decisions soon on the “stranded” properties

    Basically says govt legal service say they can ‘handle’ the article 23 issue, but much less so that regarding article 26..especially in cases where a repossession was in process courtesy of an existing court order.

    Ed: It’s very easy to get an approximate translation of the article using Google Chrome. The main problem is liquidation. (IMO this would prevent any developers’ debts being transferred to their unsold properties.)

  • Serious Fraud Office says:

    The financier and the seller took the initiative to offer loans and or accept payment in full on a property already mortgaged to or by the financier themselves i.e. Sale without clean Title, this constitutes fraud whether the lawyer failed to properly represent the purchaser or not especially under EU regulation.

  • embapaphos says:

    Nigel curious, isn’t it fraud for someone to be drawn into such a contract where one of the parties involved conceals from other that what he is selling is not what it seems (i.e a property built on land that is in essence no longer sellers? but is land that has been used as security for a loan etc unbeknown to purchaser)

    Or would this be open to attack by claims you should have checked before parting with any money?

    “The court said the law violated Article 26 of the constitution, which affords individuals the right to “enter freely into any contract.”

    Ed: Responsibility for checking details of a property for sale rests with its purchaser. Of course most people buying property instruct a lawyer to represent their interests – and as many now know to their regret, many of the lawyers failed in their duty of care.

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