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Opinion: Cyprus Title Deed law changes

Will the latest changes to the Cyprus Title Deed laws currently before parliament untie the ‘Gordian Knot’ as the Minister of the Interior has stated they would? Although they will bring relief to some people, it appears that those who have been duped into buying mortgaged property will be left to fend for themselves.

THE FIRST drafts of the laws designed to resolve the Title Deed problem were opposed by the Cyprus Bar Association that said they would “lead us into a labyrinth without solving the problem“.

In the Interior Minister’s statement on Title Deeds that we published in July last year, the Minister said that “Our policy aims to boost the property market in Cyprus, introducing effective and comprehensive practices for solving this (Title Deed) problem.

The most serious problem of all faced by existing buyers is that of outstanding developer mortgages. Both Cypriots and non-Cypriots have been duped into buying property built on land that their developer has previously mortgaged. However, the latest draft laws before parliament fail to address this vital issue.

People who find themselves in this invidious situation face the very real prospect of losing their homes to the banks if their development company fails (like Yiannis Liasides and A&G Property Wise Developments, whose buyers have been left to the mercy of the banks).

Another significant problem, highlighted by the Cyprus Bar Association and others, is that the ownership of a property is linked to the myriad rules and regulations regarding planning and building permits.

Whether you buy an un-roadworthy vehicle, a tumbled down village house, a box of melted chocolates, or a flea infested animal, you should be able to claim it as rightfully yours; irrespective of whether it is fit for use or violates some safety regulations or rules.

But yet again, the revised laws fail to disentangle ownership of a property from the complexities of the planning system and the government plans to introduce yet another level of bureaucracy, a Commission, to sort out the mess (or should I call it a Gordian Knot).

In cases where there are ‘significant’ construction irregularities, a prohibition is to be placed on the property’s Title Deed preventing it being sold, transferred, mortgaged, etc.

Is anyone in their right mind going to pay the government’s estimated average cost of €8,000 in transfer fees and taxes to secure ownership of something they cannot sell?

Furthermore, such a law may also result in the government losing much needed revenue. A property that cannot be sold will have no market value and as such, the Inland Revenue may unable to collect Immovable Property Tax from its owner.

And what about the banks; will they be willing to loan money to purchase property that could, potentially, have no market value?

Another ‘hidden’ problem revolves around the owner having to apply for a Certificate of Final Approval within 21 days of completing a project. On the face of it, this seems a sound suggestion. However, when you consider that the completion of a project may take 8 to 18 years after its building permit has been issued, buyers could still find themselves waiting for 18 years to get their Title Deeds.

Positive changes

The revised laws will be of benefit to new purchasers in that properties being sold must be free of a mortgage and any other encumbrance. Also, where a property or a building site is being sold, the contract must be accompanied by a building or division permit.

These changes are very positive and will no doubt encourage sales of new property. (Although it could still take up to 18 years for Title Deeds to be issued).

The planning amnesty is also a positive move. It will help those who have purchased property with ‘minor’ construction irregularities to secure their Title Deeds. But it will only succeed if property developers and others who have contravened the planning regulations are prepared to pay the price for their misdemeanours.

Opinion

THE ONLY people to benefit significantly from these new laws are the banks, property developers, lawyers and the Cyprus government’s coffers.

The fact that future sales will be mortgage free and contracts will be accompanied by the required permits will encourage people to buy new property leading to more business for property developers, banks, and lawyers.

But the new laws will take away the responsibility for protecting existing buyers from the state and place them firmly in the hands of a new level of bureaucracy (the Commission), and the Cypriot judicial system.

It took the judicial system eleven years to reach the Landmark Ruling by the Supreme Court, in which a Cypriot lawyer was found guilty of professional negligence. Is this a sufficient and timely remedy to the mortgage-related Title Deed problem that is such a grave concern for so many people?

As Dr. Andonis Vassiliades Professor of Law, Criminology & Penal Justice commented on the initial proposals last yearno social or legal prosthetics and general plastic surgery can alter or camouflage the fact that the body underneath – the basic legal structure and framework – is rotten.

Readers' comments

Comments on this article are no longer being accepted.

  • baileyboy says:

    Am I right in saying that the new proposals do not assist the 130,000 owners still waiting for their title deeds?

  • Whirlybird says:

    “Bravo” Nigel,

    An excellent opinion you have made and true to the letter. As it has been said time and time again by all and sundry is that the root of all this messy problem is the “greed” of the above people, also perhaps those in the right quarter/office that do care, their hands are tied by those around them.

    Until Cyprus has its own form of “Elliot Ness”then I’m afraid there will continue to be two Cyprus Problems.

  • Dee says:

    It seems to me they are just changing one set of smoke and mirrors with a new set!

    What a waste of time.

  • Andrew says:

    What type of legal system can accept that the biggest problem facing existing buyers, is that of outstanding developer mortgages, then deliver a landmark ruling, yet continue do NOTHING to resolve that same problem?

    What wrong has the buyer committed . He has brought money into this country , he continues to do so in many cases yet he is denied the right to own his land and home.

    Is Cyprus genuinely committed to Europe , committed to human rights , committed to justice.

    Cyprus ministers and lawyers should look to their conscience and their God and ask are we being fair.

  • The views expressed in readers' comments are not necessarily shared by the Cyprus Property News.

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