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Title Deeds legislation edges closer

The long awaited and often criticised bills designed to tackle the Title Deed fiasco and bring relief to the many thousands of buyers who have been waiting for many years could be implemented in the next couple of months.

LEGISLATION designed to tackle the bane of unlicensed constructions across the island, as well as spelling out who is responsible for what in real estate transactions could be ready by next month and may at long last bring relief to thousands of ‘trapped’ property buyers.

It’s estimated there are some 100,000 Cypriots and foreigners without Title Deeds for their properties, the majority because of building permit violations.

Politicians are working on a cluster of bills involving a so-called ‘town planning amnesty’ and at the same time accelerating the issuing of building and town planning permits, which under the present circumstances takes years.

The bills should be ready to go to the plenum by mid-October, chairman of the House Interior Committee Yiannos Lamaris said yesterday.

The town-planning regulations have two directions,” Lamaris said. “One leads to simplification of the procedures for issuing Title Deeds and of all those practices to which we had become accustomed so far.

The second direction will allow people to ‘buy out’ minor violations, thus enabling the acquisition of a final certificate of approval for building and the Title Deed itself.

In certain cases, the violations will be disclosed on the Title Deed so that when a property is sold the buyer knows what they’re getting, Lamaris said.

Subsequently, the fact that such violations had existed would not impact the status of the structure, its functionality or the facilities available to the occupants.

There shall be no arrangement which facilitates one person and inconveniences another,” Lamaris remarked.

One idea being mulled over is to have chartered surveyors furnish the property owner with a certificate attesting that construction works have been completed.

The Land Registry meanwhile is tasked with drawing up a ‘price list’ for violations which can be ‘bought out’ and thus ‘legalised’.

The list would class violations by type and by area, Lamaris said, although it was too early to say what the corresponding buyout fees would be. The cost list, when completed, would not require ratification by parliament.

DISY MP Christos Stylianides said that legislation to regulate town planning matters was long overdue, adding that it would “restore, finally, the relationship between the state and its citizens and the relationship between the buyer and the seller”.

He stressed that a solution to the problem was imperative to the island’s economic growth “but also, more importantly, to our country’s image and our efforts to maintain our credibility among tourists”.

The ongoing discussion [at the House committee] is taking place in a consensual climate…and we feel that in the end, and with the assistance of government technocrats, we shall come up with a radical solution to a problem which for years has dogged our society and which sends out the worst possible messages abroad regarding the state of real estate development, Title Deeds and final certificates of approval in Cyprus.

The backbone of the economy, the real estate sector has become heavily reliant on foreign buyers, particularly retirees. But the local market’s reputation has been dealt a blow after a series of allegations of property fraud, highlighted by the Cyprus Property Action Group (CPAG).

And earlier this year, a British couple won a landmark Supreme Court ruling by which they were awarded €120,000 as a result of their lawyer’s negligence in a property case.

The couple had sued their Cypriot lawyer for negligently handling a property contract in 1999, which led to them losing a significant amount of money while never getting the property. The lawyer had failed to inform the couple that the property had been twice mortgaged and had a charge registered against it. The developer who signed the contract subsequently went bankrupt and never finished the house.

Cyprus Title Deed legislation edges closer

Readers' comments

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  • @pamela – There is a common misconception about Title Deeds; you do not have to pay to obtain them. (You can obtain them for pennies).

    What you are paying is the Property Transfer Fees, which is similar in concept to the Stamp Duty that you pay in the UK when you purchase a property. Both of them are a government tax payable on the transfer of property ownership.

  • pamela says:

    After reading a number of comments regarding title deeds have any of you paid to obtain yours.

  • Alan Waring says:

    Dennis O’Hare is right to mention the ‘toxic debt’ bubble created by developer mortgages. The influential StockWatch cited over a year ago figures derived from the Central Bank that the banks were holding €5.9bn of such debt at the end of March 2009. This figure had increased by 107% from the end of March 2008. It has almost certainly increased since then, as developers seek loan extensions and some with no revenue in a flat market start to default. Just look at the ‘big names’ advertising 30% discounts yet still struggling to find buyers.

    Some others have ceased work on residential sites because they have run out of money. Some guesstimates now put the developer mortgage debt held by the banks at €7bn or more. Neither the banks nor the government will give a figure, which suggests they are afraid of the implications and market reactions.

    Quite a number of people have told me that they are removing their Cyprus deposits for safety, at least until the crisis has passed.

    Apart from that, the proposed legislation will not work in terms of buyer protection because it does not cover all the variables including the key ones.

    It isn’t even clever window dressing. It’s just elaborate nonsense.

  • Matt says:

    Steve – you’re spot on mate !

    When the developer buys the land, there is usually 1 title deed for it.

    Developer then decides to build (say) 50 houses.
    Investors buy off-plan.
    Development take years to complete because of various reasons, including project costs going over budget and can’t sell all the houses.

    Overseas Investor is surrounded by a building site and no title deed.

    Developer can’t issue 50 title deeds because he doesn’t have 50 house owners and he doesn’t want to pay transfer fees to put them in his name.

    so what does he do……. ****** All, and couldn’t care less !

    Never Ever buy land or property overseas without actually seeing a copy of title first. After you’ve seen the title, go to Land Registry and verify its authenticity.

    Don’t be lazy. Otherwise you could get badly stung…and the swelling will take a life time to heal.

  • paul ruse says:

    If you look out of the window you will see a very rare site in Cyprus a flock of pigs has just flown by. When Pigs can fly I will believe it. What I do believe, close up this mess and there will be a new one waiting another scam by Developers and Lawyers, I would suggest it will be Called Breach Of Contract. WHAT ! I hear you say, I have not done any thing wrong. So what we have to get more money out of you some how by foul means now. What’s new ?.

  • Denis O'Hare says:

    Firstly, just for the record, the majority of withheld Title Deeds are due to developer mortgages preventing their transfer and not to building permit violations. The information on how many properties are encumbered and the current balance of developer mortgages (5.9 billion Euros in March 2009) of late appears to be a State secret – why?

    Secondly, the problem of buyers being trapped in fully paid for yet illegal properties without Title Deeds is due to the abject failure of the Government, this and previous, to enforce (criminal) law CAP96/Article 10 regarding the issue of Completion Certificates. If the law was enforced NO buyer would unwittingly move into an illegal building as this is forbidden under the law. As far as we are aware there are no plans to start enforcing this law, accordingly expect another amnesty in the next few years, as per the one several years ago.

    Thirdly, as understood from the original proposal, victim buyers will be issued with a second-class Title Deed with the violations noted on the Deed, thereby significantly devaluing the property at a stroke. The legislation calls for the victims in buildings with serious illegalities to be given a Title Deed with a restriction stating that they cannot sell or mortgage it, thereby rendering it completely valueless. They are also expected to pay transfer tax for this pleasure. The Government then expect the victims to sue the (long-gone?) developer for damages – so passing the State’s responsibility for consumer protection and law enforcement back to the consumer.

    Finally, at a meeting with the responsible Minister in 2008, also attended by the Cyprus Land and Property Owners and British High Commission amongst others, CPAG were informed that the legislation would be passed before the end of 2008.

    Until the actual legislation is passed into law we cannot go back to the EU to show that it does not address the issue which was complained about by UK MEPs i.e. developer mortgages preventing the transfer of Title Deeds.

    Denis O’Hare

  • Steve says:

    Hey Jim, you can see it and I can see it. Are the rest of them so slow? Title deeds available means generally an existing property, already completed, but we all know that most of the scams and fiddles are on property bought off-plan and still the buyers keep coming and keep buying off-plan.

    Later they find out about the footpaths and the roads too narrow and the gigantic retaining walls that were not on the plans and the boundary disputes and the water supply from a pond and non-existent parking spaces and the lack of planning permission and no building permit.

    Oops, you’ll have to excuse me, I feel sick. Now I wonder what brought that on?

  • martyn benstead says:

    I have been told that solicitors in Cyprus are acting for both parties, builder and buyer, in some instances.

    This is not legal in the UK is it legal in Cyprus and has anybody else come across this.

    What can be done?

  • Ian says:

    “The second direction will allow people to ‘buy out’ minor violations,”

    No matter that all of this is laid firmly at the door of Developers / Banks/ Government legislation (lack of), there’s always a Fee to pay in Cyprus.

  • colin biggs says:

    same can different worms!

  • Costas Apacket says:

    By entering your UK post code into this website: http://www.writetothem.com/ it automatically identifies your local MP and all of your MEP’s from all parties.

    It is then very simple & quick to send an email both to your MP and also all of your MEP’s as a group, (eg one email goes to all MEP’s), by completing a very simple template with your personal details and your views about the situation in the Cypriot property market.

    It’s also useful to give your MP & MEP’s the links to the Cyprus Property News and Cyprus Mail so that they can read for themselves about the property market shambles here in Cyprus.

    Making contact with your MP and MEP will help to inform and engender further questions in the UK Parliament and the EU.

    Once the legislation currently being cooked up by the conspirators in Government becomes clearer we can then use the same process to inform and co-ordinate our MEP’s should the legislation not address the key issues required to solve the ongoing problems including Developer mortgages / loans against property we have paid for in full.

  • mickey says:

    It is doubtful that a clear solution will be forthcoming in the near future when politicians continue to talk about the ‘cost’ of achieving things, as in “The Land Registry meanwhile is tasked with drawing up a ‘price list’ for violations which can be ‘bought out’ and thus ‘legalised’”.

    The next stage can only be people caught in this situation having to pay ‘costs’ to developers, banks, the Revenue, the Registry, etc., for the privilege of not having these same people come after them for even more compensation.

    Looking on the bright side, at least the amount called for should be substantially less, but that is little comfort if you can’t afford the lesser sum anyway.

    Is there no insurance company that offers a policy against this type of claim, or if not, considering doing so?

  • Andrew says:

    As usual there is no mention of the real problem .OUTSTANDING DEVELOPER MORTGAGES. I am amazed that they still try to avoid this issue.

    This situation exists because of collusion between banks , lawyers, developers, while the state looks the other way.

    While they are at it why not introduce building control and insulate new homes. I suppose that is something else from the EU that does not apply to Cyprus.

  • Peter says:

    So the fiasco rolls on.

    Nothing has changed. Buy a house in Cyprus and the bank and developer will own it between them.

    You will end up losing your house and all your savings and no one will come to save you

  • Jim says:

    The Cypriot government are trying to sidestep the main title deeds issue, namely existing developer mortgages on properties purchased & paid for.

    They claim the main issue is unlicensed construction.

    This legislation in my opinion, is just a red herring to fool the EU into thinking steps are being taken to solve the title deeds fiasco.

    Even the Cyprus bar association states the legislation will further complicate the problem, rather than be of any help.

    It now appears that buyers not only have to be wary of developer mortgages, but risk being chased up for the developers unpaid tax dues to the revenue.

    A purchaser may be able to get a waiver from the bank for any mortgage outstanding, but I doubt a waiver would be forthcoming from the tax department.

    DO NOT PURCHASE A PROPERTY IN CYPRUS UNLESS THE TITLE DEEDS ARE AVAILABLE AT POINT OF SALE.

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