In 2001 we bought a plot of land and had a house built on it. We decided to move to somewhere closer to town and we’ve been trying to sell. We’ve had a few people around and one couple put in an offer which we accepted.
But when their lawyer did a search he found that there was a mortgage on the land and he advised them not to buy. I went to see him and he told me that a mortgage was taken out by the land owner from the Co-op Bank after we had bought it.
Is this true? When we bought the land our lawyer told us that it couldn’t be mortgaged because we had a specific performance contract at the land registry.
How could he mortgage the land after he’d sold it to us. Isn’t that fraud?
I suspect that you bought a plot of land that is part of a much larger plot, which has yet to be sub-divided into smaller, individual plots for each of the houses. If this is the case, there will be just one Title Deed for the larger plot of land.
What the landowner can do, quite legally, is take out a mortgage using the land as collateral, even though he has sold part of it to you. The financial institution that loaned the money, in your case the Co-op bank, then registers the mortgage against the Title Deed of the land at the Land Registry.
This is where the problem lies because the Land Registry only has the one Title Deed against which the mortgage can be registered.
But this problem should be resolved when the mortgage is paid off. When this happens, the bank will remove the mortgage from the Title Deed. This will enable the landowner to arrange for the division of the land into individual plots and Title Deeds to be issued for each of them.
But you have a couple of problems address. Firstly, there’s no way that you can force the landowner to pay off the mortgage. And even if he does pay off the mortgage, you may have to wait many years before your Title Deed is issued.
I suggest you take legal advice on this matter. You could also try approaching the Co-op Bank to see if they’ll provide you with a mortgage release certificate stating that the piece of land you’ve bought is free from any mortgage.
I don’t want to sound too negative, but there is a couple living near me who are in a very similar situation. The bank refused to issue them with a mortgage release certificate and their lawyer has been trying for quite some time to sort things out; so far without success.
Is it fraud? In some countries probably; but the antiquated laws in Cyprus are in dire need of modernisation to provide protection for property buyers.
(I wrote an article about this a couple of months ago. You can read it at Cyprus Title Deed Scams)