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Doubts over new moves on Title Deeds

Questions remain over how the gentlemen’s agreement enabling ‘trapped buyers’ to get the Title Deeds to properties they purchased and paid for in good faith will work in practice; the Association of Cyprus Banks has yet to respond.

Cyprus: Doubts over new moves on Title DeedsHOPES of issuing up to 70,000 trapped property buyers with their Title Deeds were revived earlier this month after banks pledged not to raise objections to a disputed law, but the top land registry official told the Sunday Mail this week he was uncertain how this would work in practice.

In return for the approval last Sunday of bills making it easier for banks to foreclose on property owners in arrears on their mortgages, the Bank Association had promised MPs that banks would accept the provisions of the 2015 law.

The law aimed at helping thousands of owners who had paid for their properties in full but had not been issued with their Title Deeds because the developers had mortgages on the properties.

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

“We acknowledge the effort the country and parliament are making and in turn we must also contribute,” Christakis Patsalides, chairman of the Association of Cyprus Banks, told the House finance committee.

But it remains to be seen how this so-called gentlemen’s agreement would work in practice according to the head of the land registry, Andreas Socratous, especially as a Supreme Court decision could scupper the process.

“If this is not implemented in practice then there will not be any result,” he told the Sunday Mail.

As the head of the department, Socratous had been granted under the 2015 law the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions, as the state sought to sort out the Title Deed mess.

However, banks contested the 2015 law and won rulings that it was unconstitutional.

Courts said it violated Article 26 of the constitution, which affords individuals the right to enter freely into any contract.

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

The confusion suggests that the law could end up going to the Supreme Court for final judgement. That, it is feared, could spell the end of the effort to resolve the issue.

Last week, Disy leader and House finance committee chairman Averof Neophytou warned that he would come down on the banks hard if they breached the gentlemen’s agreement.

Socratous told the Sunday Mail that the land registry had contacted banks asking to know how they planned to follow through on their pledge.

The bank association, he said, had not yet responded.

He said a move that would prove they mean business would be to withdraw the cases pending in court.

According to Neophytou, the agreement should mean that if a buyer has fully paid off his property in good faith, irrespective of whether the developer continues to owe the bank, the bank will stop the objections, appeals, and court procedures and will give their consent to these owners provided the transaction was without deception or fraud involved.

Banks said they would view each case separately.

For instance, there were cases where subcontractors who did work for developers were given flats instead of money, which they probably rented afterwards. They then took advantage of the law and secured a Title Deed.

They also say that in some cases the buyer together with the developer, pre-dated contracts in a bid to get a title, cheating the bank in the process.

These cases do not fall under the pledge and will certainly be contested.

Socratous said predated contracts were not accepted by the land registry as it did not have authorisation to do so.

Such cases had to go to court and prove that all the procedures were above board. If the court was convinced then it issued an order for the department to accept the contract, which it did for a small number of cases.

The director said his department had so far processed around 5,000 title transfers, a job that took about eight months provided that all the criteria were met.

One of the sticking points that cause delays is the absence of a title in the first place. The law also allows for authorities to step in and issue Title Deeds because if it was left to the developer it would never have happened.

That, however, hit the ‘red-tape’ wall since they had to go through the planning office and local authorities, which, according to Socratous, did “not handle the matter with flexibility”.

Such things as the absence of green areas and pavements were reasons for these authorities to refuse to give final permission despite being told that they could issue them with a footnote about the omission or irregularity and chase the owner through court later if need be.

The land registry has so far received 16,000 applications from trapped buyers after the law was put in place in 2015.

Around 8,000 of those developments already had Title Deeds and 5,000 of them have since been transferred to the buyers of individual properties.

For the remaining 8,000, Title Deeds must be issued first before they can be transferred.

The trapped buyers’ issue is not the only embarrassment relating to Title Deeds.

In 2008, officials discovered that over 100,000 Title Deeds were outstanding, a matter also highlighted by international lenders in 2013 when the island sought a bailout.

There were numerous reports at the time – when the government undertook the task of updating property records – of apartment buildings and villas existing where the records showed fields or empty plots.

Since then, the number has been reduced and according to Socratous, they were working hard to clear the slate.

“Whether we like it or not, as a country, we must resolve the problem,” he said.

Readers' comments

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  • Brookster says:

    Kath / Dave, Count me in as well
    We currently have an individual action against The Alpha Bank – Been going on for 5 years!
    We feel we are getting now where fast.

  • Gary says:

    Kath / Dave, I am in as well. If we continue down the road of individuals having to go to court on their own then the banks have won. We need a concerted effort if the banks are ever to be brought to task on this. The Cypriot Parliament has failed us and, at the same time, inadvertently played a role in delaying any chance of resolution by making false promise after false promise.

    Editor – are you able to provide any guidance on how to set-up and manage such a group moving forward?

    Ed: The Government has referred the matter to the Supreme Court for a decision on whether the ‘trapped buyers’ law is Constitutional and some buyers have done the same. Nothing will happen until the Supreme Court has ruled. (One of the District Courts agrees that the law is Constitutional.)

    What I suggest people to do initially is contact the All Party Parliamentary Group for the Defence of the Interests of British Property Owners.

    You’ll find guidance on the Internet on how to set up a group. E.g. you will find some useful information on how to get things going at Set up a community group.

  • linette says:

    We are two of the people completely stuck. No title deeds, a house we desperately need to sell and a mortgage we can’t afford. It’s been 10 years now and we have no savings left and scramble each month to get the money together.

    We need the title deeds to even have a chance of selling the house and not being left with a £100.000 debt to the bank. This is ruining our lives and it seems that no one in the Cypriot government seems to have a clue or even the urgency to fix this.

  • Dave D says:

    Kath, I will start the ball rolling…I will throw €100 in the kitty…so now we don’t need quite so many and I’m not joking, think it’s a great idea…anyone out there willing to organise such ?

  • Aggis Demetriou says:

    In my way of thinking the Banks are to blame, they knew exactly when their client developer made a sale, they should had been there to take the funds not letting the developer taking the cake and eating it!

    Ed: You’re right. I know for a fact that a person had their bank account in the same branch as the developer and the bank saw the payments going into his account. When this person spoke with the bank they said that the developer agreed to repay parts of the loan each time he sold a property, but he failed to honour the agreement – and the bank did nothing!

  • Kath says:

    If only we could get the 70000 people to set up a group and pay €10 each. A fund of €700000 would go some way to suing the solicitors for lack of due diligence. They had a duty of care to us and they should pay for their crimes.

  • Dave D says:

    So now we have the Head of the Land Registry, Andreas Socratous admitting he doesn’t know what a Gentleman’s agreement is …..figures….we are, after all , in Cyprus !

  • Costas Apacket says:

    So why is it all about innocent property buyers trying to get the title deeds for something that they are legally entitled to?

    Why is it not about the Banks and the authorities pursuing the Developers, their guarantors and their bent lawyers for the money they owe?

    Don’t these crooked developers their guarantors and their bent lawyers have any collateral that could be seized?

    Of course they do.

    Are the crooked Developers, their dodgy guarantors or their bent lawyers living in tents or sleeping on the beaches?

    I think not, so why are we concentrating and focussing all of the time on what the innocent buyers need to do?

    Why isn’t parliament passing laws allowing the Banks to seize the collateral for what are in effect massive NPLs of the developers and their guarantors?

    The Government seems to be able to find billions of taxpayer euros to bail out Flying Lemming 2, (the usual suspects Piggy Bank), which has been totally mismanaged, but can find nothing at all to help innocent property buyers to legally own what they have paid in full for.

    In this corrupt, nepotist, country, only the usual suspects are helped and protected by the government, the legal system, the banking system and the public services, and the rest of us can go swivel.

    The usual suspects all urinate into the same receptacle, and the sooner they are relieved of all control of this island, the better for all honest people.

  • Pippa says:

    Is it too much to expect that I will have ‘clean’ title deeds for a house we paid for in good faith in full 10 years ago. Or is it just the Bankers, lawyers and developers that get preferential treatment?

    If I pay for a coffee in full I do not expect it to be denied the privilege of drinking it because the cafe owner owes the bank for the mortgage on the premises or that he has not completed the wall and play area that he was supposed to?. Can anyone tell me what the difference is please?

  • dagwood says:

    I thought it was all too good to be true. Let me guess; they couldn’t find any gentlemen.

  • MartynG says:

    The long-running shambles rumbles on. Yes, efforts are – finally – being made to unblock this unholy mess that still leaves many thousands of purchasers without Clear Title, but the problems created in the past are, it seems, far from being satisfactorily resolved.

    Worrying to see that the Cyprus banks reluctance to proceed as per their Gentleman’s Agreements may lead to this whole matter going to the Supreme Court, with all the likely delays and deliberations stretching things for yet another few years!

    These matters were Well and truly highlighted back in the 2013 Cyprus banking crisis and actions suggested, developed?

    But as usual the monolithic and flawed ingrained Cyprus ‘systems’ remained unaddressed as the horrendous mainstream financial fiasco continued to rumble on.

    “When will they ever learn?” Pete Seeger, 1960s

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