LAST week, Jean Christou reported how an elderly woman, who has been waiting for the Title Deeds to her property since 1982, was being held to ransom by her developer who is demanding more than €25,000 in what he claims is ‘Immovable Property Tax’, using the threat of withholding her Title Deeds to elicit payment.
Everyone knows there are massive problems in Cyprus with property developers abusing property law to make huge profits for themselves. So why is the Government refusing to protect the rights of property buyers by stopping these cowboys and conmen?
IN OCTOBER 2005, the Cyprus Mail published an article ‘New Rights Planned for House Buyers’. This claimed that the Cyprus Government was going to plug loopholes in the law, introduce fines, and provide property buyers what it called ‘an arsenal of weapons against unscrupulous property developers’ such as Korfi Mountain Estates.
What has the Government of Cyprus done to implement these eagerly anticipated ‘new rights’? ABSOLUTELY NOTHING!
IN OCTOBER 2006, I took part in a round table discussion on the subject of Title Deeds. The discussion was broadcast live on the Cyprus Broadcasting Corporation’s second radio channel. During the discussion the MP for Limassol, Rikkos Erotokritou, stated that the “House of Representatives are worrying a lot about the situation”. (If you want to listen to the whole discussion, click here).
The Government has been ‘worrying a lot’ for the last 18 months, but what has it done? ABSOLUTELY NOTHING!
IN SEPTEMBER 2007, the Cyprus Mail published another article ‘Law Reform Hopes to clear up Title Deeds Trap’. This claimed that the Government was looking to provide greater security to homebuyers by enabling their Contracts of Sale to take precedence over the developers mortgages.
What has the Government of Cyprus done to implement these ‘law reforms’? You guessed it ABSOLUTELY NOTHING!
In today’s Sunday Mail, there is yet another article about the problems. This admits that the laws of Cyprus are designed to protect the lenders, i.e. the banks, and not the buyers, who are provided very little protection.
Under the current law, developers’ mortgages take priority over the buyer’s Contract of Sale. So if a developer goes bankrupt, the bank can auction the land to recover its loan and any extra money made goes to the buyer, which is no comfort to anyone who has paid for their property in full – like Roger Snelling and others like him.
The article goes on to say that the onus should be put on the banks by giving the buyer’s Contract of Sale priority over the developer’s mortgage.
“This would force the banks to be much more cautious in approving loans for developers, which would be no bad thing, as they would be performing an unofficial regulatory role. They would be more selective about whom they gave loans to and this would keep the cowboys out of the property development market”.
But in my opinion, giving the buyer’s Contract of Sale priority over the developer’s mortgage will not resolve the problem. Consider what will happen if the buyer wants to sell the property. The developer’s mortgage will have priority over the new Contract of Sale and the banks could well step in and auction the property to recover the developer’s debt!
There is only one solution to the problem. The law must be changed to prevent the sale of mortgaged property – and it must also be changed to prevent property developers mortgaging property once it’s been sold.
Until the Government takes assertive action to stop the cowboys and conmen, and assuming that you don’t want to end up in the same unenviable position as the 83 year-old woman, Roger Snelling and many others like them:
DO NOT BUY PROPERTY IN CYPRUS
unless it has a Title Deed that is NOT ‘encumbered’ by a mortgage or any other claim.
If you buy property that is mortgaged or that could be mortgaged
YOU RISK LOSING EVERYTHING!
