A bill being drafted by parliament seeks at long last to arm property buyers with an arsenal of weapons against unscrupulous property developers, though it remains to be seen how effective its application will be.
The move aims to address the thousands of cases where someone paying for a plot of land, an apartment or a house is deprived of the title deeds, which are in the possession of land developers. Thus buyers cannot reap the full benefits of ownership, including the right to transfer property paid for with their hard-earned cash.
Often, a house may be mortgaged several times over by the original owner (who might be a person other than the developer), leaving buyers at a legal dead-end. Thousands of people are currently in limbo due to this state of affairs.
To plug the loopholes in the legislation, the bill would make a sale agreement – provided buyers have met all financial obligations – equivalent to a mortgage, paving the way for the property to be listed with the Land Registry.
With a sale agreement in hand, buyers would be able to take legal recourse to demand “special execution,” i.e. a court order that the concerned property should be transferred in their name.
As things stand now, there is a two-month deadline in which buyers can submit a sale agreement to the Land Registry. But if this timeframe cannot be met because of delaying tactics by a developer, the buyer is left stranded. With the proposed amendment, the two-month deadline is abolished.
Moreover, the new law will be retroactive, meaning that people buying property in the past will also benefit.
Where a property, such as a plot of land, is not listed in the developer’s name, the bill makes it mandatory that the original sale agreement between the developer and the original owner be submitted, so that the end-buyer is not left out in the cold.
In addition, if due to poor management by the developer the property is put up for auction, the buyer will have auction rights. And in the event a house has been sold to multiple buyers (this has been known to happen), the first buyer to submit the sale agreement to the Land Registry will have preferential treatment.
More ominously for wayward Cyprus property developers, they would be compelled to provide buyers accurate and complete information about a property. This information must be given both pre-purchase as well as be put in writing on the sale agreement. Failure to comply is a criminal offence, punishable by jail time of up to one year and/or a £1,000 fine.
This last clause in particular has aggravated the Land Developers Association.
Loucas Christodoulides, general manager of Buy Sell estate agents, told the Cyprus Mail the new stricter regulations should have a positive impact on the market overall.
In principle, he said, doing away with transgressions should attract more foreign buyers, who may have been discouraged by these practices in Cyprus and therefore are drawn to invest in other neighbouring countries, such as Spain.
“Obviously, people coming in from abroad should get a fair deal,” he said.
“The initial reaction from the market is uncertain, but in the long term the proposed legislation should be a bonus.
“It all depends on whether the draft bill is watered down during the political process,” added Christodoulides.
He said that on the whole the market was doing well; compared to last year business was picking up in Limassol, Larnaca and Famagusta, while there was a slight drop in the rate of sales in the Paphos district.
Information and documents buyers will be entitled to:
- The name of the owner and all data relating to the natural and legal status of the immovable property.
- Building permit and all relevant terms and conditions.
- The existence of mortgages or any other rights in immovable property (claims arising from the legal position of the object in question).
- Architectural plans and schematics clearly indicating every section of the property, including area size.
Copyright © Cyprus Mail October 25 2005