We bought a resale property in Cyprus near Ayia Napa just over a year ago with full Title Deeds and used an independent lawyer in Larnaca. Before we signed the contract, he told us that he’s checked things out with the Land Registry and everything was OK and after we’d signed the contract he lodged it with the Land Registry (we have this in writing).
A few days ago he called us to say he’d received our permit from the Council of Ministers and we went with one of his staff to the land registry to get our Title Deeds.
To our horror we found that the previous owners had taken out a 50,000 mortgage on the property and we couldn’t have the deeds. We were very angry and went to see our lawyer, but he insisted that he’d checked things out before we signed a contract and there was no mortgage.
Can you tell us what’s happened? Is there anything we can do?
I’m very sorry to hear what’s happened. You seem to have done your homework properly – you’ve bought a property with its Title Deeds, used an independent lawyer who seems to have checked that everything was OK, but still you find that you’ve bought a mortgaged property.
Assuming that neither your lawyer nor the Land Registry has made a mistake, what I suspect may have happened is that the owner took out a mortgage on the property between the time your lawyer checked things out with the Land Registry and the time he deposited your contract of sale for Specific Performance. (I suggest you get the details of the mortgage from the Land Registry to verify this).
If the mortgage was taken out between the Title search and the deposit of your contract, I would consider this to be fraud. You should report the matter to the Police.
I suggest you speak with your lawyer to see if he can uncover what’s happened and perhaps discuss the problem with the bank that loaned the money to see if they can help out in any way.
In the worst case, and I stress it is the worst case, you may have to pay the bank the 50,000 plus any interest to secure Title to your home. Unfortunately, the bank is within its rights to repossess your home and auction it or sell it to recover the money owed if the borrower defaults on payment. But if the person who took out the loan has another property in Cyprus, it may be possible for the bank to take alternative action.
I’m afraid that your experiences should serve as a warning to others buying property in Cyprus. Even though you may do your homework properly, use an independent lawyer who does a good job, and buy a property with its Title Deeds, things can still go very wrong!