A RECENT mini-poll conducted by the Cyprus Property revealed that approximately 4% of the 1,360 people who voted have been waiting for their Title Deeds for more than 20 years, while a further 6% have been waiting for their Title Deeds for more than 10 years.
The reasons for the huge delays in obtaining Title Deeds are well known (see Less than one in five has Title Deeds). However people do not always appreciate the consequences of not having Title Deeds.
Why is a Title Deed important?
Those buying property in Cyprus are not considered to be its owner until that property’s Title Deed has been registered in their name. This presents property buyers who do not have Title Deeds with a number of serious problems:
Buyers do not own the property and are therefore unable to enjoy the full benefits of property ownership; including the right to sell or transfer it to anyone they wish without the agreement of its registered owner.
Should buyers wish to sell before title to the property has been registered in their name, they must first come to an agreement with the property’s registered owner.
People who have been charged more than €34,000 by disreputable property developers from whom they purchased the property for this ‘agreement’. And although a prominent lawyer has stated that in his opinion, these so-called contract cancellation fees are illegal, it has not put an end to this despicable practice.
To supplement their retirement pensions or to raise money for a business venture, some people wish to raise money against the value of their property through equity release loans and other schemes.
As they are not considered to be the legal owner of the property until such time as its title has been registered in their name, they are unable to raise money using the property as collateral.
In some circumstances property developers can still raise a mortgage on the land on which they have built properties without their buyer’s permission or knowledge – even though the buyer may have paid for ‘their’ property in full and may have been living in it for many years.
Ultimately, property buyers are the ultimate guarantors for these mortgages which result from inadequate legal protection and unethical banking practices employed by many of the Cyprus banks.
Two property developers have already gone bust and the banks have told a number of their buyers that their homes could be taken away from them and sold to recover the developers’ debts.
Disreputable property developers prey on buyers without Title Deeds by extorting huge amounts of money from them claiming that it is Immovable Property Tax.
One property developer demanded more than €25,000 in unpaid Immovable Property Tax from an elderly British lady and threatened to withhold her Title Deeds until she paid up! Fortunately her lawyer pursued her case in court where, more than a year later, the judge ruled in her favour.
The amount of Immovable Property Tax she owed to the Government after living in her home for 26 years? A mere €430!
Title Deeds are not issued for properties that have been built illegally, i.e. constructed without Planning or Building permits or which suffer from other planning irregularities, until such time as those illegalities have been ‘regularised’.
If a property has been built illegally, its buyers are left at the mercy of the authorities. Ultimately, the authorities could issue ‘Demolition Order’ resulting in the destruction of the property even though buyers may have paid for the property in full and may have been living in it for many years. Buyers in this situation receive no financial compensation for their loss.
Buyers of apartments and other types of property in building complexes are unable to establish ‘formal’ management committees to manage, insure, maintain and repair the common areas.
Although they may establish ‘informal’ committees, those committees have no legal standing and cannot, for example, take action against non-payers of management fees.
Buyers, therefore, have no option but to rely on property developers to manage and maintain the common parts of their developments. Some developers shirk their responsibilities; others provide inadequate services, while others charge exorbitant management fees – increasing their charges by 30% each year.
As you may have read elsewhere in this magazine, the Cyprus Government is proposing a number of amendments to existing legislation to “untie the Gordian knot”.
But the amendments contain nothing to help those who have been duped into buying mortgaged property or those who are being financially abused and held to ransom by unscrupulous property developers.
The government has also suggested that aggrieved buyers should apply for a court order. But with 140 cases awaiting trial in the criminal court with 20,000 cases still pending registration to allow legal proceedings to begin, several cases involving foreigners have already been lost as they cannot stay in Cyprus forever to be called as witnesses.
Indeed the Cyprus Bar Association has publically condemned the government proposals saying that they “will lead us into a labyrinth without solving the problem”.
Property sales to foreigners are down by 76% this year resulting in serious financial problems for Cyprus. If the government wishes to encourage foreigners to buy property here and restore the island’s good name and reputation, it must take immediate and decisive action to resolve the Title Deed problems.
For the latest poll “Should the Cyprus government ban the sale of mortgaged property?” go to the Cyprus Property News and check out the ‘Have Your Say’ poll in the right hand column.