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Trapped buyers (update 2)

The House Legal Affairs Committee is meeting today in efforts to resolve constitutional issues with the trapped buyers law. Meanwhile here is sitrep from Marina Massoura from the law firm of L.G. Zambartas LLC.

trapped buyersTHE DECISIONS of the Paphos and Limassol District Courts regarding the trapped buyer’s law have created confusion and anger amongst property buyers in Cyprus.

It needs to be remembered that the Transfer and Mortgage Law 9/65 was amended in 2015 by introducing Articles 44IH-44KZ and the main purpose was to protect trapped buyers.

The amended law and subsequent transfer of title deeds using this law were challenged by the banks and the courts were of the opinion that the decision of the Director of the Land Registry to transfer the property into the names of the buyers violated Articles 23 and 26 of the Constitution, as these decisions were taken without the consent of the bank.

Two weeks after the issuance of the decisions, it seems that the Cyprus Land Registry has been instructed not to proceed with transferring any title deeds under the trapped buyer’s law. It seems that the Cyprus land registry will still work on applications which have already been submitted and they will accept the submission of new applications, but they will not proceed with any transfer of title deeds until the situation has been clarified.

It remains to be seen whether the Land Registry, developer or the buyers will appeal the District Court decisions to the Supreme Court of Cyprus. An appeal against a court judgement must be filed within 42 days from the issuance of the judgement, if there is still time.

Marina Massoura
Lawyer
L.G. Zambartas LLC

Update 1 – 16 June

In a statement issued earlier today the Interior Minister Constantinos Petrides said:

“An intensive consultation is taking place between the interior ministry and the attorney-general so that a lawful arrangement can be found that would free the trapped buyers of mortgaged real estate. I think we’ll have something more substantive to say in a few days.”

The outcome of these consultations will finally resolve the situation for the many thousands who were duped into buying property in Cyprus that was built on land that its developer had earlier mortgaged to the bank.

Update 2 – 19 June

The Law Office of the Republic of Cyprus has decided to appeal the recent District Court decisions regarding the trapped purchasers’ law.

It is understood that the purchasers are also appealing these decisions.

Further, it has been decided that law will continue to be applied until the Supreme Court issues a decision. This means that the Land Registry will continue examining applications under the trapped purchaser’s law and continue transferring title deeds.

In addition to the above, the Members of the Parliament are proceeding with amending the law so that all parties (bank, developer and purchasers) are legally protected.

Marina Massoura
Lawyer
L.G. Zambartas LLC

Readers' comments

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  • Henry J 10 says:

    Just a query are the updates 1 and 2 for June not July as stated. Also does the continuation for issuing title deeds apply to Paphos. Also to people who the Alpha bank have proceeded with court action like myself.

    Ed: Thanks for the correction. As far as I am aware Title Deeds are still being issued. It’s the transfers to those against whom court action has been taken that are suspended.

  • embapaphos says:

    @ED, thanks for update, Very keen to see how MPs will tweak the law to maintain protection of all involved and when they will actually do so (Wednesday this week mentioned by some sources)

    I REALLY hope that as I have mentioned before they do not penalize in anyway those who are to/have received the deeds via this law e.g. by way of offloading developers/third parties debts to such buyers.

    Maybe it is just me but I don’t trust much of what the government does or says.

  • embapaphos says:

    @Nigel, hi, there is an article in incyprus property today about a meeting on Wednesday where legal rep of govt and land reg head will relay their findings to the the house legal committee, will have to wait and see then how they plan to skew the existing law to be constitutional.

    In the House are trapped homeowners

    Ed: Here’s a rough translation of the article:

    “Official information from the Legal Service and the Land Registry will have Wednesday members of the Parliamentary Legal Committee for the decisions taken in relation to enclaved property owners who fell victim insolvent estate development business. The evacuation of property procedures were frozen because of the decisions of the provincial courts of Limassol and Paphos, which deemed unconstitutional the law. However, the Legal Service and the Cadastre, after extensive deliberation, decided to continue the application of the law. Also decided to post appeals to the Supreme Court.

    The Legal Service, from the day that the first decision was issued is available year until July 4 to file an appeal. Please note that the Legal Service in the course of the appeal will argue that there is the right to property is violated, because the banks are secured by mortgages. It will also try to answer the question to contract freely, which is one of the reasons for decisions of district courts.

    Along with the appeal, the executive will prepare a bill that will be sent for legal vetting in the Legal Service. According to information of “F”, the bill would amend and improve the points considered as unconstitutional courts. The changes will focus on non-violation of Articles 23 and 26 of the Constitution concerning the right to property and to contract freely.

    In the session of the House Legal Committee will be attended by the director general of the Interior Ministry, the Director of Lands and representatives of the Legal Service.”

  • scott stanfield says:

    Dont buy any properties in Cyprus regardless of what the so-called lawyers say.

  • Kath says:

    Okay, so the banks are saying their constitutional rights have been violated. What about our constitutional rights? Is there any way all the trapped buyers could get together and be represented by a lawyer and bring our own case to court? Has this been discussed previously? We will never get anywhere unless we all stand together.

    Ed: We’ll have to wait and see what the ‘revised’ trapped buyers law says.

  • embapaphos says:

    @a demetriou, all I know is that the trapped buyers law as it stood was a way out for buyers duped into buying already mortgaged property, and a way to get your deeds WITHOUT having to pay what the developer may owe the bank and without having to pay the developers possible debts to the state ie taxes etc.

    How they are going to change it remains to be seen, as for the state doing what it wants you are 100% clear example is the when deeds are about to be transferred into buyers name, the land registry can slap any price it wants on the value it thinks your property cost when you bought it and hence rake up more transfer fees, you can contest it but that comes with a threat that they may revise their price up ! and you end up paying even more.

  • A Demetriou says:

    Another scam by the government to con people out of more money. It’s the governments fault in the first place for allowing developers to sell houses without issuing deeds.

    I was fined 769 euros also saying I failed to register it and pay some sort of tax. I thought once you buy the house you pay the tax on the value of the house to them and they should register you as the owner of the property and as living there. Instead they were sending demands to pay this tax to the house that I sold for seven years and they added three years fine. Talk about robbing us left right and cent.

    I was told it was no good taking them to court because others tried it and ended paying costs as well. The government have got it all worked out so it’s heads they win tails you lose.

  • embapaphos says:

    @Pippa, totally feel for you and totally clear that apathy is rife, on a good note at least publicly the land reg head did say this morning that the whole mess was bought about by the lack of control on the state side and lack of control of banks lending. He could have gone further and actually mentioned the corrupt developers and lawyers but he didn’t. I hope it all works out for you.

    The BANKS RECKLESS lending is beyond doubt, someone very close to me is personally aware of the fact that during the building boom banks money was lent to developers even BEFORE any sort of collateral (where needed) was secured from developer, it then became a frantic rush to draw up loan agreements and get the security for a loan already given.

  • Pippa says:

    As one of those 65% of foreign nationals I object to the inference that Cyprus has any sort of decent reputation to be besmirched.

    Our development albeit small, is not completed, and I expect will never be. Being the only foreign national we are the only ones needing title deeds so be will be able to sell. We can’t even get CYTA to put in a telephone/internet landline although the ground work is completed.

    I just want what we have, in all good faith paid for in full, so that we can get away from Cyprus and start having some sort of life again.

  • embapaphos says:

    @Ed, Total lack of accountability if you ask me & sketchy info from those who need to give people answers, there is no consistent line from mps that had the decency to reply to me when i posed the 2 core questions:

    1. will current deed holder be affected? if so how?

    2. will applications being processed be affected? if so how?

    Mr. Sokratous was on RIK radio this am, not so much answering questions, but throwing stats around, the law will continue to be applied pending a final decision regarding appeal made by govt.

    Since 2010 some 100,000 deeds pending have dropped to 34,000 today and it is those 34,000 that are the most problematic (developers who have just abandoned builds etc) that the land reg head has taken on.

    Of the 40k sales agreements at land registry that concern some 65,000 people, 65% are
    belong to foreign nationals who are dragging the Cyprus name through the dirt abroad he says.

    The finance legal services and land registry are looking especially with the experience gained in the last 2 years of a applying the law to be able to apply it more efficiently whilst also amend it at the same time.

    Either way thanks for you tireless efforts in trying to make these people see sense and updating the rest of us, thanks again.

    Ed. I can’t see how those who have received their deeds will be affected. One person who got in touch with me has already sold her home in Cyprus and moved on – and I suspect others have done the same.

    Everything can carry on as normal, Title Deeds can be issued BUT those deeds cannot be transferred to the property’s purchaser if a prior mortgage exists. Once this problem has (hopefully) been resolved work should continue as ‘normal’.

    It’s hardly surprising that foreigners are dragging Cyprus name in the dirt. Many have been duped into buying property built on mortgaged land, it can take decades to get a Title Deed (some I know have been waiting since 1979), building control and inspection are non-existent resulting in gross breaches of planning regulations that prevent deeds being issued, etc, etc.

    On a positive note it’s good to hear that the number of properties with deeds pending has dropped to 34,000 – it was around 120,000 not too long ago, but it’s still more than the total number of properties sold in the SIX years 2011-2016 (inclusive)!

  • steve r says:

    My bank in the UK (HSBC) pick up on everything that happens with my transactions. I spent more time in Cyprus last year than I normally do. The bank contacted me by phone on more than one occasion and eventually stopped my debit cards even though I had funds in the account. They told me that the account had been flagged as :gone away:. In short they said that I no longer lived at my UK address.

    This is just an everyday current account so why cant the banks keep an eye on Cypriot business accounts that involve millions and should have a clear business plan attached to them. If you take out a mortgage with the same bank as the developer then the bank has double security. If no mortgage was attached then you have to pay off the developer loan before you can apply for your deeds.

    Why do people keep buying in Cyprus when all this information is so well published. When we bought in 2005 the only people that had this information was the lawyers, they just forgot to pass it on.

    Ed: I guess “forgot to pass it on” is a euphemism for “deliberately withheld the facts knowing that if they told their client, the sale would not go through”.

  • embapaphos says:

    @Ed, your comments are very true, for sure the banks knew monies were coming in to the developers accounts and yet not be used to repay loans…disgrace if you are ask me, a very rough translation of some late news (Friday time 20:56) again from sigmatv

    Stuck buyers: Gordian knot Solution in 3 steps

    There will be an appeal against the decisions recently made.

    The trapped buyers law will still be in full swing until a decision is taken at the appeals court.

    In the meantime also the trapped buyer law will be amended.

    Indeed things are fluid but everyone needs to know where the govt are leading the trapped buyers…

    Ed: Let’s hope tha lawmakers are successful and get it right this time.

  • embapaphos says:

    @Ed, apologies, was an interesting 15 min talk on sigma TV this a.m with MP Marios Mavrides and Anna Theologou involved, both said that those who have received deeds thus far via the law won’t lose them. Going forward if banks did not contest it people could still get deeds via the law, and that the objections the banks raised so far have been in cases where the sums have involved €1 million and over.

    Theologou went on to say that where a bank lent a developer initially and as security the land & subsequently properties sold that were built on this by developer and buyers financed from same bank, then the bank is at fault for knowingly selling to buyers something that was already mortgaged.

    Personally I think they are vying for a change in the law that will take into account the banks initial argument in cases like above they can be held responsible, but for cases where there was a cash buyer they couldn’t have known that the developer was selling properties (and on mortgaged land).

    Ed: Apologies not needed, things are very fluid at the moment and I’m grateful for your contribution.

    I can understand the banks being unaware that a property had been sold in cases where a buyer literally handed over a wad of cash to pay for the property.

    But in other cases where buyers did not require funding from the same bank, the bank will have spotted money flowing into the developer’s bank account from the purchaser’s bank account and should have acted.

    (One of the Liasides’ buyers even had their bank account in the same branch of the bank where Liasides had his company account and there is no doubt the bank staff watched as the money flowed into the Liasides account. When Liasides went bust the purchaser spoke with the manager of the branch who said that Liasides hadn’t repaid a cent of his mortgage – although he had a written agreement with the bank to channel a percentage of money received from sales to repay the mortgage.)

    Hopefully we’ll get some clarity in the next week or so.

  • Andrew says:

    Surely someone must appeal that local court decision. If not, then why was the “trapped buyers” amendment, passed into law, in the first place.

    Was this exercise simply a smokescreen designed to appease the Troika?

    Ed: I know for a fact that a number of ‘trapped buyers’ have managed to get their Title Deeds. It’s only recently that the banks (predominantly the Alpha Bank) have succeeded in obtaining court decisions.

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