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Another stab at resolving the Title Deeds mess

The Cyprus government to take another stab at resolving Title Deeds mess created by nefarious developers who duped people into buying mortgaged property as the law passed in 2015 failed to fully address the problem.

Cyprus Title Deeds protestTHE GOVERNMENT will take another swing at fixing the problem of ‘trapped’ property buyers, after a law passed in 2015 failed to adequately address the Title Deeds mess.

In parliament on Monday, land registry director Andreas Socratous said an amending law has been drafted whereby, in order for a bill of sale to be submitted to the land registry, the property in question must be free of any encumbrances.

In the wake of the law on forced property transfers, said Socratous, some 15,000 applications were filed, of which only 7,000 had a Title Deed.

Of these 7,000 properties, around 3,500 have since been transferred.

The 2015 law aimed to sort out the mess created by the failure to issue Title Deeds to people who 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.

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 land registry estimates there are 70,000 of these trapped property buyers.

The 2015 law granted 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.

But following a string of court decisions, where banks objected to the law, the land registry had suspended procedures, as authorities contemplated their next move.

Nonetheless the attorney-general’s office had instructed the departments involved to continue implementing the law while appeals are filed at the Supreme Court, which will have the final say on the matter.

According to Socratous, to date the banks have brought around 250 cases to court. A significant proportion of the cases involve Alpha Bank, he said.

Some of the court cases have been won by the banks, largely on the grounds that the buyer’s claim on the property infringed on the contract between the bank and the developer.

But in September, the Larnaca district court did uphold the 2015 law, allowing trapped property buyers to obtain their Title Deeds irrespective of the developers’ own commitments to banks.

Due to the confusion and mixed signals in the wake of the law, the government is now looking to iron out the kinks in the legislation.

Readers' comments

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  • emba says:

    Change takes time in Cyprus, and I feel for all those who have not seen justice yet. Whilst i totally agree with what has been posted by many regarding a dirty deed being useless to some extent BUT I would prefer to have a dirty deed and property registered to myself than it having remained in the crooked developers clutches….least this way I have the option to clean the deed even-though surely the responsibility of the developer for building in violations of laws.

  • Chris says:

    What is to stop the developer mortgaging the property between the buyer signing the purchase contract and registering that contract at the Land Office? I believe this happens often.

    Ed: From the revised law of 2011:

    “A vendor of a property is required to deposit a buyer’s contract of sale at the Land Registry before he encumbers that property with (for example) a mortgage. This is an important change to the law which will now recognises that a buyer has a better right over the property if he has signed a contract of sale as it requires the vendor to deposit that contract before mortgaging the land.

    Should a vendor fail to comply with the above he will have committed a criminal offence and will be liable to a prison sentence of up to two years and/or a fine not exceeding €5,000.”

    It’s not foolproof!

  • Pippa says:

    Can I assume that it is more advantageous to have no title deeds and sell a property by an assignment contract, if the buyer agrees, than have a ‘dirty’ title deeds which means you cannot sell? If so this is a bizarre situation and cannot be legal under EU law, but then again when has Cyprus implemented EU laws when they impinge on business practice here??

    Ed: It is bizarre situation (although I’d use a stronger adjective). Unfortunately many matters relating to property are outside the remit of the European Union. There’s an excellent document edited by Diana Wallis MEP and Sara Allanson that’s worth reading European Property Rights & Wrongs.

  • Stelios says:

    One other important issue which has not been touched upon is the fact that of those 7,500 deeds that have been issued, a very large number have been issued with UNAUTHORIZED WORKS and the thorny issue is the fact that although owners receive a deed, this deed can NOT BE TRANSFERRED voluntarily under the article 65(KZ)(3)Immovable Property Law, unless these works have been resolved. This is a very important issue as most foreign owners who receive a deed have no clue that they can’t sell their property and they are stuck again. Basically you have a title but you can’t sell it and most likely can’t mortgage it, so what’s the point of issuing it in the first place.

    The law says that you have to apply for the notes (unauthorized works – illegal changes to the buildings or usually refers to omissions such as, incomplete safety measures, roads, pavements, green areas which have not been constructed) to be removed from the deeds so you have a clear deed. Depending on the notes on the deed, one must refer to under Article 10 of the Road & Building Law and to the Urban Planning and Planning Law 2011 in order find which category the note (illegality of the building can be legalized.)

    Stelios Hambis

    Ed: I don’t know why the authorities cannot force developers to correct these unauthorised works (assuming they’re still in business) by refusing to grant them Planning and Building Permits until they’ve resolved the problems.

    I am aware that several developments in Paphos have been fitted with septic tanks rather than sewerage treatment systems and could be issued with a Certificate of Unauthorised Works.

    There are many other cases where fire doors, etc. have not been installed. Also lack of pavements, roads, green areas, etc.

    I was contacted recently by someone with an apartment. The development comprises three blocks and all three should have lifts installed, but only his block has a lift. Although there is nothing wrong with his block all the apartments in the development will be issued with Certificates of Unauthorised Works. The laws passed in 2011 were designed to resolve this problem – if his block has no problem the title deeds should be clean.

    Stelios: Yes, that’s correct, each individual should be able to get a clean title deed under the current law. the problem is that there’s so much red tape or actually lack of training and knowledge and willingness to assist among the lower members of the various departments associated with Real Estate Planning, development etc.

  • John says:

    Steve – We recently enquired where our Mis-Selling CHf mortgage case was currently at within the court system & was subsequently told that, it could take years to get to court.

  • Stuart says:

    I split up with my wife and the BOC refuse to allow me a mortgage on my own I’ve offered to pay as much as I can but unbelievably they say it wants the full amount or nothing at all. I have offered them the property back they won’t take it my solicitor has tried to broker a mortgage again the same, no title deeds I’m screwed.

  • steve r says:

    Does anybody know of the progress made by groups of people who were taking on the banks regarding the mis-selling of CHF mortgages. These people used 1 solicitor. Not heard much about them for ages.

    Ed: I’ve received unconfirmed reports that some of the cases are due to be heard in court on 14 May 2018.

  • Pippa says:

    Dave D – Like us you are stuck with little hope, unless something is done to ensure that those who have paid for their property in full or who are servicing their mortgages get their clean title deeds ASAP.

    Why a property buyer is penalised because the developer have failed to complete the development, or the roads etc, which form no part of the purchase is both unfair and hopefully be against EU law (perhaps someone with more knowledge of the law could elucidate).

    But I have little or no faith in the ‘law’ makers here doing what a civilised country would consider is right and just.

  • Ivan says:

    It is not only the developers that trap buyers, the government were also very guilty. I bought a property that was completely clear and all was checked to prove it was clear of encumbrances. Contracts were signed & monies exchanged so I should have been able to get the title Deeds for MY property.

    When I tried to I was told the PREVIOUS owner now had a tax bill due AFTER he sold me the property (Capital Gains Tax on the profit he made) so this was attached to MY home! When I asked for the full details on what the tax office had done to collect this debt, I was refused on the grounds that the debt had nothing to do with me! Not my debt, but the government attached it to my property AFTER I bought the place.

    As the seller had left the country the Tax office told me I should pay the bill if i wanted the title deeds as they didn’t know where he lived.

    I believe that law has been changed now but it defies belief that it could be allowed in the first place.

    Sick place indeed Dave D

    Ed: When you went to the Land Registry office with the previous owner to effect the transfer of ownership, the Land Registry would have asked him produce receipts confirming payment of Immovable Property Tax, Capital gains tax, Sewerage Board Tax, Municipality/Community Tax. The transfer of the property to your name would not have gone ahead without these receipts. I suggest you take this matter up with your lawyer.

  • Dave D says:

    And in the meantime, having followed all the guidelines, paid each and every bill/tax due on our property and indeed paid for it upfront before we moved in, we still await our Deeds after 12 years ….never ending, what a sick, sick place Cyprus is.

  • Pantheman says:

    So this now means that trapped buyers remain trapped and cannot sell????

    I don’t see how this law helps, unless I have misunderstood it.
    Anyone??

    Ed: The proposed law should prevent those buying property in the future from being conned into buying property built on land that the developer had previously mortgaged to the bank. We’ll have to wait until the Supreme Court rules on ‘trapped buyers’ law.

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