The Politics of Homeownership and Title Deeds (2)
In last month’s issue of in In Touch we critically examined the historical, social and legal issues, outdated laws and legal contradictions and the collusion between the authorities, developers and vendors in general which have gradually let to the present sorry affair regarding “titleless” properties.
The quest for unlimited and unchecked competition for financial gain and pecuniary advantage in the construction industry makes the construction, selling and buying of “titleless” properties even more of a ruthless, immoral and legally risky act.
In this Part 2 on the subject, we provide actual, real examples of buyers and their troubles in the property market. The case studies have been selected to demonstrate the point and diverse concerns and are not intended to be typical of all experiences. Indeed, we selected the less extreme and appalling cases to avoid emotive charge and unfair presentation. In part, such more serious and appalling cases, including cases of properties built and bought without even planning and building regulations permits let alone the certificate of final approval, have been deliberately omitted because they are at the moment being heard in Court and reference to them may jeopardize the due process of law.
Case Study 1
A group of detached houses built 11 years ago by a construction company through various deals with the land owners. Disputes between the construction company and the land owners ended with the land owners bought out by the construction company through third parties who were then compensated for their financial support by each being given a share of the land and two houses each at the time of construction.
Registered owners and complications
There were five registered owners: the two partners of the construction company and three other private individuals. The latter raised capital on the value of the land and houses hence the involvement of three banks as well. Soon, one of the private owners fell out with the partners of the construction company and relations between them turned sour. As if to make things worse, the construction company, following the completion of the development, remained a company in name only. The two partners, following disagreements, went their own way. In another twist, one of the private owners died without a will and without an officially and legally appointed administrator of his estate. He left his grown up children and their families and his mistress (who then married to another person and had a child from the new husband) to sort things out. As if that was not enough, the mistress, husband and child lived in one of the properties in question owned by the deceased man’s estate.
Legal wrangles and title deeds: the first six years
Due to the above complications and lack of interest the issue of title deeds remained dormant for the first six years. The various parties, whose consent and signatures were needed to proceed to applications for title deeds, had by now dispersed across the Island and abroad. The task of finding each relevant party and securing consent appeared daunting at best and, at worst, an impossible task. One missing signature, and without a power of attorney to cover for such eventuality, would have spelled disaster and no title deeds. Also, obvious breaches of the original planning permits and consents by both the construction company and the purchasers of the properties meant that there was a distinct possibility that the authorities could refuse title deeds on grounds of illegal constructions. Added to this, the two main parties to the title deeds, the ex-partners of the construction company, refused to cooperate. They insisted that this was the task of individual purchasers and they had no cash or time to spare!
The next five years and the quest for title deeds
After five years of almost daily and direct negotiations with diverse interests; legally sorting out the mess left over by one of the private owners on his death to execute and administer his estate; reaching agreement with his ex-mistress and her family to vacate the property (on agreement for compensation); making six return journeys to Paphos, eight to Limassol and three to Nicosia; many telephone calls and written exchanges with parties living abroad at the time; 16 visits to the Land Registry; five to the planning and building regulations offices; six inspections on site with officials; three visits to banks; eight meetings with the construction company; keeping purchasers motivated and informed; resolving regular disputes among them as they could hardly understand the workings of the context they had found themselves in; dealing with refusals by some of these to contribute to the costs; five court appearances; direct challenges and appeals to the authorities to see reason and to expedite the complicated work of issuing title deeds; confrontations with, challenges and legal threats to rogue parties particularly the construction company; sorting out unpaid bills and taxes and repayment of bank loans, the title deeds were, finally, issued – but at a price.
As much as it is difficult to believe, within three months of receiving their title deeds, one of the relevant authorities threatened to instigate legal proceedings against the owners unless they demolished or restored their properties to their original planning permit state! Add to that, the omission by the construction company to install the necessary sewerage underground system for the properties to be connected to the main system, meant the owners were and remain legally liable. They now face litigation unless they provide for such a system at a very prohibitive financial cost to them.
Case Study 2
A couple in their eagerness to buy their “dream” home – an old terraced property – had arranged, without seeking first independent legal advice, to reserve the property by handing out to the estate agent 1,000 Cyprus Pounds which was treated by the owner as non-refundable deposit. They also promised to pay a further 1,000 Cyprus Pounds to the owner within a week. The owner advertised the property with vacant possession, full title deed and ready for transfer and registration.
Legal advice and consultation
Following the appointment of legal advisers, the intended purchasers were advised they had acted against their own interest by handing out cash and promising to pay even more without first making sure that any deposit paid should be in the first instance refundable and subject to a satisfactory search on the title of the property. They informed the estate agent that no further money would be provided until the status of the property’s title could be ascertained. The owner was requested to fill in a vendor’s questionnaire about the property. Despite his strong objections and complaints at first, he relented and completed his responses and signed to satisfaction. In particular, that he was the rightful owner of the property, that he had every right to convey and transfer the property to the purchasers and/or their successors in title, that the property was free of any disputes, and that it was not burdened with any financial or other obligations to a third party.
Search on the title
Contrary to the assurances of the vendor the search identified serious problems with the property. These contradicted his promises and claims. The property was heavily mortgaged to a bank; there were boundary disputes with one neighbour; and the property did not come in physical terms only. There was also a social and personal “gift” included in the price. The purchasers, on entry, would have found an ex-wife with children happily living there and in oblivion that their ex-husband and father had sold and disposed of the property without their knowledge and consent.
The purchasers were advised to walk away before they incurred serious financial and other losses. But they insisted that all avenues at resolution should be attempted. After nearly a year of such attempts at resolution; threats of legal action against the vendor and his agents for making false statements and misrepresentation of facts; the vendor still insisting that the purchasers owed him money; continuous but fruitless efforts with the bank and his ex-wife to come to some acceptable arrangement, the purchasers heeded advice and turned their back on the deal. Happily, the vendor under pressure returned the deposit to the purchasers and the deal was terminated. The purchasers thus saved their initial investment and, in the long run, they had probably saved themselves from ruin. It cost them though a lesson about the property trap and a year’s legal fees for activity undertaken on their behalf. Both could have been avoided had they sought out advice in the first place.
Case Study 3
An elderly couple spent all their life’s savings in acquiring what they thought and were promised to be a freehold property. They paid the agreed price of the detached bungalow via their legal adviser who also drew up the contract of sale. On taking possession, and after six months of living there, they could not understand why they had problems with the provision of services (e.g. electricity, water and telephone) and why they had no proper postal address. They sought a second independent legal opinion and advice.
A sale of contract unworthy of use
On studying the contract the independent legal advisers were stunned by the poverty of the contract. Other than other serious technical and legal flaws identified in the contract, it was obvious that there was no search on the title as the contract had totally missed or omitted to mention the registered owners of the land onto which the house was built and that they in turn were heavily mortgaged to a major bank. The only vendor mentioned was the company that built the property. In consequence, by not including the owners of the land, the contract of sale had failed to create an estate in land over the whole property. The real owners of the land, who made the agreement with the developer to build the property on their land, should have been included in the contract as vendors and co-owners for without that the remedy provided under Law 96(I)1997 would not apply and could not be invoked against them. Even if the contract was accepted (and in this case due to its blatant poor quality was not accepted) by the District Lands Office for specific performance purposes, there would not have been any remedy provided to the purchasers in any civil actions filed before a Court since the co-owners, the absolute owners of the land, were not party to the agreement. Furthermore given that the contract was not even registered at the District Lands Office there was no chance of any remedy being applied against the vendors in any dispute over, for example, title deeds and their transfer and registration on the name of the purchasers. Simply, the contract was a scrap of paper with little legal value if any. There was nothing in it to prevent the vendors, in the absence of any legal charge on them, from re-selling or disposing of the property, or re-mortgaging it at will, or just not complying with the terms of the contract with legal impunity.
Action and outcomes: six months on
Following numerous considerations and contacts with the relevant parties, a new contract of sale was drawn up by the legal team. This included all co-owners (the developer and land owners) and the interests of the bank. They also succeeded in getting the bank to issue a written waiver to the purchasers. The co-owners carried out all necessary work for the provision of services and they provided for a separate title deed and its transfer and registration on the name of the purchasers in a specified period of time. The contract of sale was duly registered at the District Lands Office for specific performance purposes. This heralded the successful and satisfactory completion of the task but at the cost of six months’ of constant and daily attempts at conclusion and new legal costs to the purchasers.
The purchasers were lucky in this instance. For, among other opportunities, the relevant parties involved were willing to cooperate, despite their differences, to see the task through. The developer, co-owners, bank and authorities where relevant, all proved willing to oblige. In any other situation the two purchasers would have been in a very threatening and risky position regarding their asset. They are currently considering what appropriate action to take to recover their losses due to professional negligence and possibly fraudulent claims.
Professor Dr. Andonis Vassiliades & Maria Chimonides
© Prof. Dr. Andonis Vassiliades, October 2007. No part of this article may be used or reproduced in any form without prior written permission from the authors.
Professor Dr. Andonis Vassiliades is Professor of Law, Criminology & Penal Justice and a Clinical Psychotherapist.
Maria Chimonides is a Lawyer and a Legal Consultant.
They are at The Law Office & Research Centre:
Main Office, Larnaca: Kalogreon 16, Ria Court 19, Office 101, 6016 Larnaca
Branch, Oroklini: George Griva Digeni 16, Office 3, 7040 Oroklini (Close to the Bank of Cyprus)
Tel.: +357 24624449, +357 24654011
Fax. +357 24621336
This article first appeared in In Touch Magazine, issue 13, 2007