Suddenly the Cyprus Ministry of the Interior and the press have realised that a new type of property titles for which we have written in this and other newspapers over two years ago, is a fraud in the making against unsuspecting buyers, especially the foreign ones who rely to a large extent on their solicitors.
The delays in securing the relevant permits and the title deeds are well known. We have reported on this situation in the past in the press and the local TV channels on many occasions.
The non-resolution of this problem that is especially apparent in the Paphos District, has led developers to all sorts of ways and means to by-pass the system. We hereby report in this article about the fraud in the making regarding the conversion of hotels and hotel apartments, mainly on the beach, into residential accommodation, which are usually sold at the price of around £3,000/sq.m.
Such illegalities (since the conversions are carried out without the relevant permits) are apparent in all towns, but with a special concentration in Limassol and the Paralimni area, with Larnaca and Paphos to follow – How is this done?
- An existing tourist project has a building permit. As such it has all public services.
- The developer carries out the conversion works and the authorities do nothing about it. The works are carried out in full view and at times under the cover of the municipality within which the project is situated (see Paralimni).
- The developer undertakes responsibility in the sales contract to secure the change of use permit within a period of two years from signing.
- If this does not happen there is a clause in the contract that if after two years the permit is not secured the developer will transfer a share of the project on the buyer’s name – e.g. in case of 30 apartments he will transfer 1/30th share.
- How on earth the public bodies (such as electricity, water, telephone, sewage) will connect this totally illegal building with their network is beyond us.
What the developer “forgets” to inform the unsuspected client is that:
He (the buyer) is participating in an illegal act. As such, other than he stands to have a property without the provision of public services, if he becomes a shareholder of an illegal building he will also share the responsibility of the law i.e. get a demolition order, pay a fine and possible a jail sentence.
Who is to blame for this new and emerging dangerous situation?
- The local authorities that turn a blind eye.
- The government/Town Planning Department that must be aware of the situation and does nothing about it.
- The architects and engineers who supervise a building project without a permit.
- The governmental service bodies for providing an illegal building with services.
- The solicitors involved in the project who usually do not explain all the dangers to the buyers.
- The financiers who finance both the developer and buyer for an illegal building.
- The buyers themselves who are aware that they participate in an illegal act are happy to go along with it.
It is fortunate that the press took notice of this, even at this late hour for the government to take action. For these reasons we firstly suggest the government to secure a stop order of the building works and secondly to prosecute developers for undertaking an illegal building, including the sale of property without a permit and also the architects/engineers etc for supervising an illegal building.
These initial reactions should start putting things right in the Cyprus property market, if for anything else, to the satisfaction of those legally abiding developers, who feel that they are the poor relatives in a lucrative market.
By Antonis Loizou FRICS
I am grateful to Antonis Loizou FRICS of Antonis Loizou & Associates Limited for allowing me to republish his articles on this blog.Cyprus Property News, Views & Opinions – Fraud in the Making