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Home buyers may lose their properties

Some forty property buyers in Cyprus may be left at the mercy of the bank and face the prospect of losing their homes following a move to liquidate a property developer with debts of around €3 million.

Little boxesCRIMINAL proceedings have been initiated against a property developer in Paphos for the non-payment of VAT and the Court will soon be making a decision whether to send him to prison.

Meanwhile, a bank has moved an application to appoint receivers and liquidators to recover the company’s debts of approximately €3 million. Those who purchased property from the company oppose this move as they believe that the company has sufficient assets to meet its debts without them having to lose their homes.

A group of around forty Cypriot and foreign buyers are involved in this tragic situation. Some of the properties they bought have not been completed due to the financial problems encountered by the developer.

Buyers are blaming the bank for their predicament. In 2006, because of the economic situation, the bank refused to make a further loan to the property developer that may have enabled him to complete the project. However, the bank continued to grant mortgages to those buying property on the development in spite of the fact that it knew the developer was experiencing financial difficulties.

Readers' comments

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  • Martin says:

    Although I have read many issues with developments in Cyprus, I cannot seem to find any solid legal firms in the UK who are tackling this.

    Governments seems to expose this issue for what it is in Cyprus, Fraud! I also have a property in Cyprus like many who have left comments and the situation looks very bleak. In fact it is likely my developer may soon be in this position.

    What should an owner in this situation do? Is there any way out of this mess?

  • Andrew says:

    And Jesus went into the temple of God, and cast out all them that sold and bought in the temple, and overthrew the tables of the moneychangers, and the seats of them that sold doves,

    And said unto them, It is written, My house shall be called the house of prayer; but ye have made it a den of thieves.

    Only this time the den is jointly occupied by lawyers and politicians and debt ridden developers.

    Bring on the day of judgement.

  • Peter says:

    Curmudgeon – well lets just hope you still have a property to sell when the time comes?

    My title deeds have been at the land registry for over 3 years, and I bought my villa in 2001, but the rumour they are closer to being issued is just that.

    It may be time to start chipping into a ‘war chest’ because if we stand alone we will fall one by one, and at the end of the day we all have something to lose.

    Not until the Cyprus Government understand the developers are “dead in the water” will we get any action from them.

    Until then I will be doing my utmost to help kill the monster and spread the word that Cyprus is morally and financially bankrupt.

  • Matt says:

    Thanks Nigel..

    According to the Citizens Charter – SPECIFIC PERFORMANCE,

    If you have a water tight ‘contract of sale’ & you have followed the correct procedures, you have no worries in suing the developer for your title deed.

    The Banks & Government can’t touch you, as you have done nothing wrong – right?

    So what happens next…

    Developers run and hide. Company is liquidated. Assets stripped to pay off debts.

    ….and so it continues….and so it continues….and so it continues…

  • Matt says:

    There is very little light at the end of the tunnel..

    The Banks will not back down lightly!

    Developers usually build on a plot of land that has ONE title deed. If they build 10 house, the original title must be destroyed and 10 new title deeds issued to new land owners.

    Steve – does the “SPECIFIC PERFORMANCE” fall into the above scenario or does it only apply for a single plot of land to one new land owner?

  • Cyprus Expat says:

    Finally there is some light at the end of the tunnel. Could this be the end of the finger in the dyke!

  • Steve says:

    I keep reading in posts on this web site that the property industry is going to collapse and no one is going to buy Cyprus property until the whole mess is cleaned up. It is far more likely that the repossessions will go ahead and the banks will have willing buyers queuing up to buy them; the human race is like that, profiting from other peoples’ misery is commonplace.
    In the meantime the developers are reassuring potential and existing buyers with statements like the following taken from a property information guide issued by one of them.

    “THE LEGAL SYSTEM IN CYPRUS IS LARGELY BASED ON THE BRITISH EQUIVALENT AND SAFEGUARDS THE PURCHASER’S RIGHTS IN MANY WAYS. FOR THE PURCHASERS PROTECTION, ONCE THE AGREEMENT HAS BEEN SIGNED AND A DEPOSIT PAID, THE LAND REGISTRY IN CYPRUS PROVIDES A SIMPLE AND EFFECTIVE LEGAL INSTRUMENT CALLED THE “SPECIFIC PERFORMANCE”. THIS PROCEDURE PROTECTS THE PURCHASER’S OWNERSHIP RIGHTS UNTIL THE TITLE DEEDS ARE ISSUED AND TRANSFERRED TO THEIR NAME. THE CONTRACT IN THE HANDS OF THE HANDS OF THE LAND REGISTRY CANNOT BE WITHDRAWN BY ANYONE AND THEREFORE THE PROPERTY CANNOT BE LEASED, SOLD TRANSFERRED OR MORTGAGED. THE STATUS CAN ONLY BE ALTERED BY THE PURCHASER HIMSELF.

    Now isn’t that reassuring?

  • @ martin law – I have removed the name of the developer from your comment.

    As I said earlier,”I do not want to risk prejudicing the Court case by naming the property developer concerned”

    But you could well be correct.

    Regards,

  • Alan Waring says:

    As Hector says, this is just the tip of the iceberg. I am aware of two other groups of investors (one 30-strong, the other 40-strong) who are going after their respective developers, banks, bank valuers, lawyers etc. I refer to these cases and the implications in Castles Built on Sand Part 3 running in Financial Mirror this Wednesday.

    I believe that Nigel will also run it later this week on this website courtesy of Financial Mirror http://www.financialmirror.com.

  • Hector says:

    This is an example of what is only the tip of the iceberg unfortunately. The authorities don’t want to take action in case the full extent of the disaster waiting to happen is revealed. The same situation is happening in north Cyprus with banks auctioning properties they have given mortgages on to developers (who have since defaulted) despite knowing that the properties have already been sold and paid for.

  • martin law says:

    Are you allowed to divulge if the developer in question is in fact xxxxxx of xxxxx Developers Limited, as I and a purchaser from them and are owed a substantial amount of money from them.

  • Matt says:

    David Richmond – sorry to hear your caught up in this appalling, despicable mess.

    If the house owners are all UK, make sure you also appoint a UK Greek Barrister !

    This is very critical to your case. Do Not put 100% trust in a Cypriot lawyer, even if they give you assurances. Also ask the Cypriot lawyer to sign a document stating there is no conflict of interest with anyone involved in this case. You think I am talking over the top but nepotism is a powerful thing in Cyprus.

    Let the UK team of Greek Barristers control ALL paperwork and if the Cypriot lawyer delays or doesn’t perform to your satisfaction – sack them ASAP!

    Also find out the original value of the developers building land/plot. If the bank loan is far greater than the title deed is worth – the bank has acted fraudulently in my opinion.

    Serve a writ ASAP and request the developers assets are frozen. This prevents them from clearing out their bank deposits and doing a moon light runner!!!!

    Good Luck to All

  • @Curmudgeon – I do not want to risk prejudicing the Court case by naming the property developer concerned.

  • Curmudgeon says:

    Nigel, can you name the developer?

    Peter, a vast number have their Title Deeds or are within striking distance of receiving them.
    I for one do not wish to destroy the resale market as I have a villa here. I’ll gladly shout ‘don’t buy off plan’ but I’ll not join you in shouting ‘don’t buy in Cyprus’.

    I for one would appreciate you target your enemy with more accuracy. Cyprus maybe morally and financially bankrupt but I’m not as long as I can sell my villa when it suits me. :-)

  • David Richmond says:

    The property owners are not going to let the bank get away with this. I know, I am one of the people involved.

    They have appointed an expert lawyer to represent them and using proper legal processes she will prevent the bank from ripping us off, in spite of the many legal issues and challenges from the bank’s lawyers and appointees.

    A process of legal discovery will soon commence and the property owners will seek to prove that the bank knew there were problems and if this can be done, the bank and its directors may have acted fraudulently = big trouble for the bank.

    Watch this space. Fraud is fraud and Cyprus is now part of the EU.

  • A Fraser says:

    Cyprus has laws of its own, I was charged 3% for purchases in our local off license store because I was paying by a Debit Bank Card he says the bank charges him so we have to pay. I understand if it was a Credit Card but not a Debit Card also no notice was posted to state this.

    Also the no smoking ban is a joke Cyprus is happy to take the EU money but will not conform to EU rules our local is still smoking no surprise after all this is Cyprus.

  • steve says:

    This is all going back to the same scenario. If title deeds were issued when the property developer received final payment then these people would not be in this situation. Specific performance is supposed to lock the property but in this case I am sure that the banks / taxation and any other government body would over rule this. Now the only people who are going to get fat are the official receivers. I am in pretty much the same scenario and will be watching closely

  • Stuart says:

    Cyprus is the last place on earth that any sane person would want to invest in property due to its notoriety as a place of rampant dishonesty and lack of principles.

    Cyprus Property News is doing a sterling job in its attempts to bring this to the attention of investors throughout Europe but the EU is still failing to take any serious action over the behaviour of this particular member state.

  • Peter says:

    Its not a “Tragic Situation” as the article says. It is a situation of dishonesty and corruption encouraged and allowed to exist by the financial bastion of our society, the Banks, and by our Government who should be guarding the reputation of Cyprus as a place of honesty and principles. Instead our Government has allowed this situation to develop where the building industry will fall like a pack of cards.

    Again I say buy in Cyprus and you will lose your home, your sanity and all your capital, as the Government allows developers and banks to ride roughshod over your right.

    Pass the word overseas – Cyprus is morally and financially bankrupt.

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

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