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Our View: Title Deed bill is sheer lunacy

The legal changes proposed to protect property buyers from the abusive practices of developers are sheer lunacy and will do nothing to restore overseas investor confidence in the Cyprus property market.

THE report we published earlier today, ‘Title Deed bill agreed by deputies‘, leads us to believe that the government has lost the plot in its efforts to resolve the Island’s long standing Title Deed fiasco and restore overseas investor confidence in the Cyprus property market.

Clearly, House Committee Chairman Ionas Nicolaou has failed to achieve the stated aim of: “striking a balance between the rights of the buyer and the seller.”

According to Mr Nicolaou the bill “gives the buyer the right to have the property transferred to his or her name regardless whether a pre-existing mortgage on that property has been paid in full.”

As to how this would work in practice, Mr Nicolaou explained:

“Having calculated their participation in the share of the loan for which there is a mortgage preceding the sales contract, buyers will be able to propose settling that amount to the lender on behalf of the seller.”

“Once such payment is made, for the purposes of a specific performance [court order] it shall be deemed to have priority over any mortgage.”

“A court will be able to order that the real estate be placed in the name of the buyer irrespective of whether the mortgage has been paid in full.”

In other words, if a buyer has been conned into buying a mortgaged property he can get its Title Deeds by repaying a proportion of the mortgage to the mortgagee; i.e. the financial institution that loaned the developer the mortgage.

Does this strike a balance between the rights of the buyer and the seller as Mr Nicolaou claims? I’m sure the banks will be happy to get the money and the developers will breathe a sigh of relief knowing that part of their debt has been cleared.

But what about the buyer who has been conned; not only does he have to pay for his house but he also has to repay part of his developer’s mortgage to receive his Title Deed!

There is another point that the Deputies have not taken into consideration:

If the vendor, or anyone else involved in the sale of a property, withholds the fact that a property is mortgaged they would be violating Directive 2005/29/EC ‘Unfair Commercial Practices Directive’.

The Directive states that it is a violation for a business to omit or hide material facts from buyers, which if had been made known, would have influenced the buyer’s purchasing decision. As the poll we conducted last year indicated, 98% of the 1,036 respondents said they would not have bought a property in Cyprus had they known the land on which it was built was mortgaged.

This EC Directive was transposed into Cyprus laws 103(I)2007 and 107(I)2007 and came into force on 12th December 2007; the competent authority in Cyprus being the Commerce Ministry’s Competition and Consumer Protection Service.

This raises the question of why the Government has proposed this half-baked bill rather than using existing laws to pursue nefarious developers, and others, who have broken the law?

Conclusion

Rather than taking action against the law breakers, this bill supports their nefarious practices while graciously allowing deceived property buyers to pick up the bill.

It is sheer lunacy!

Readers' comments

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  • dimitri says:

    @Nigel, still awaiting a response from all the persons I contacted, as for the searches you are right, either way if the ‘Unfair Commercial Practices Directive’ does indeed apply, I cannot for the life of me see how it could be passed in the house of representatives plenum, either way I have asked a ‘contact’ who happens to be a lawyer (recently finished so not yet corrupted by the system), and he knows a DIKO party member of parliament, so have asked for clarification especially on the point of just conveniently forgetting about the EU directive and making the developers and banks happy, most people I talk to have no doubt that the big boy developers and banks paid Mr. Iona a nice sum to force this bill through………

  • @dimitri – thanks for your input and the email addresses which are very useful.

    Regarding property searches. Many of those buying property do use a lawyer to act on their behalf. But lawyers do not do search on a property at the Land Registry as they should.

    Virtually everyone buying property here is told that the laws are the same as the UK. If a lawyer in the UK did not do a Land Registry Search and a Plan Search at the local planning authority on behalf of clients buying property, they would be guilty of gross negligence and the Law Society would probably withdraw their licence.

  • dimitri says:

    One argument I am hearing is why people did not do a search on a property or the land a project was being built on before entering into a sales agreement that albeit omitted any encumbrances developer had on property? This does not justify of course what is being proposed in these bills that the purchaser gets loaded the extra cost of the developers mortgage no matter how small this is….I suggest everyone here contact Cypriot members of European parliament and and ask how compliant to EU law these proposals are…here are some email addresses…i am not for one going to sit back and think of England in this case, and will keep pestering them

    ionasnicolaou@cytanet.com.cy
    info@kasoulides.com.cy
    takis.hadjigeorgiou@europarl.europa.eu
    antigoni.papadopoulou@europarl.europa.eu
    parliamentary-committees@parliament.cy
    vouli@parliament.cy
    european-affairs@parliament.cy
    s.g@parliament.cy

  • Alex says:

    One has to wonder how Cyprus ever qualified to be a member of the EU. The current government are living in the distant past with no conception of the rights of European property buyers or the consequences of their ineffective resolution of the title deeds issues.

  • bewildered says:

    I once had a girlfriend with this attitude she said about our relationship `What`s yours is mine and what`s mine is my own` sounds about right for the Cypriot developers eh.

  • andyp says:

    Thanks Unbelievable, I totally agree. As I said The developers have spent the money on themselves leaving us holding the baby. They are far from stupid people. Regrettably we have no way out regarding our own mortgages,but would love to learn of one, but we can still fight against the developer mortgages.

    With,in my opinion, the ridiculous verdict on the Conor case today, in favour of the developers, there will certainly be no easy fight for justice through the Cypriot court system.

    Yet another and possibly the final nail in The Cyprus Property Industry coffin.

  • Unbelievable says:

    @andyp – I’m half Greek Cypriot and I know how Cypriots operate in business. The old school Cypriots may not be Degree educated but they are tougher than most when it comes to a business deal!

    Firstly Andy, you have to know your history. What happened in Cyprus during 1960 & 1973. What the Cypriots lost and who they blame for the war. What was the Government playing at during these times. You will learn a lot from the past and understand why the Cypriots feel they have been cheated.

    Personally, I think the Cypriots are allowing this scandal to happen and couldn’t care less who they rip off. Maybe they see this as there ‘compensation’

    My Cypriot father-in-law waited 18yrs for his Title Deed…yes 18 years! Why? because the developer ran off to Australia in the 1990’s with the money he made from developing 60 houses. Developer never transferred Title Deeds and didn’t pay a penny in taxes or local authority charges. Then during the late 90’s he died and everything went into Probate until they traced his business partner. The 60 house owners were lucky he was still alive and eventually they got there title after having to back pay 12yrs worth of local council charges.

    Developers will move their money into other family accounts and also overseas before they go bust. The banks hold the Title Deeds until they get the loan repaid.

    If you have bought a house and have been DUPED into signing a contract….DO NOT CONTINUE PAYMENTS!

    You must get your Barrister on the case and find a way to back out of the contract before the developer runs off with his millions.

    Trust me guys, the Cypriots developers have far more cash than you and I and you will come unstuck if you sit around waiting.

    Try and sell a White Elephant and see how much it’s worth :-(

  • Tonio says:

    The concept of theses bills is infantile, how can 100,000 + people not be heard ?

    Word of mouth alone, means most of the informed (investing) world knows the score.

  • Tonio says:

    If your interpretation is correct Nigel that is some word-play officially. I think most of the victims were assured in the first place that Cypriot law is based on British law. This is the lie that is reproduced in brochures and developers spiel. This is the lie that should be punished as it is clearly misleading, and since printed is factual.

    There is only one solution stop the rot now! It was the banks greed in issuing double mortgages with only a single equity to cover themselves. Those properties paid in full should be immediately issued deeds.

    The shortfall can be eased by the huge income in taxes, that is the equation that should be addressed. The figure of 100,000 plus homes all paying capital gains and related taxes is substantial. The government could bail the banks and secure a new just law, preventing this from occurring again.

    We all know the perspective investor is far from naive today. An admission of guilt followed by swift-robust action is the only path to save face and offer a chance for future growth. Otherwise it’s all down hill from here on in guys!

  • andyp says:

    Should have added for Gerry that not paying your mortgage i.e. the mortgage you took out to buy your Cyprus house will not help you.

    You can and are more likely to be pursued by your Cypriot bank in the UK

  • andyp says:

    @Unbelievable. You may have noticed that in these recent reports and through many previous articles he developers have not been paying anyway and he banks have simply been rescheduling the loans every 90 days so that they do not appear on the banks books as toxic debt.

    I understand and hope they do go bust. At least it will bring an end to matters sooner rather than later.

    Moodys and Fitch are already on the case with their downgrades and in my view Cyprus is actually bust already.

    The developers have spent all the money on themselves and “getting things done” and they have no money left to pay The Banks. A personal opinion I might add.

  • Greg Gregory says:

    The more I hear the more I can’t stand their cynical exploitation and insult to people intelligence. I’m of Greek Cypriot origin by the way. Call me picky or a self hating Greek Cypriot if you like

  • Mickey says:

    All the comments below are justified and understandable given the current sad state of affairs.

    But stopping loan repayments will only cause more problems for us in the short term, and possibly crystallize action being taken against us sooner than otherwise would be the case.

    It must be assumed now, given the ridiculous announcement by Mr Nicolaou, that any meaningful, fair changes to the law will not now be forthcoming from the law makers.

    In which case, the only viable course of action is for people who know they are in this situation to either choose a test case to take to the EU court or club together and take a class action there. This could be done either under the Unfair Commercial Practices Directive, or the Human Rights legislation, or both.

    I am sure there are enough people sufficiently concerned about this to contribute to a fund to afford the proper legal representation this would entail.

    Count me in.

  • paul ruse says:

    All we can all do is contact your MP in the UK or where ever you are and your Euro M P . Remember they want your vote. You want my vote what are YOU going to do ?.Point out this dose not just affect me , but lot,s of other people, s health / wealth / have been robed. By a corrupt system that a government choose,s to do nothing about.

    Moaning in this forum gets it off your mind and may make you feel a bit better. But it dose nothing to solve the problem.

    We need a fighting fund. If every one gave 52 Euros to a fund so we act as a group and take the Cyprus government to the E U court. Tackle the whole issue Mortgages , Lawyers, Title deeds . Estate agents , the lot.

  • Peter says:

    So now we know. Its not the fault of the Government, Banks or Developers any more. Its the fault of the Buyers.

    They, the buyer, had the chance to get their title deeds, ‘WE’ put in place the legislation for the ungrateful individuals to get their deeds and they refused to accept them.

    I mean we were only asking for them to pay a little more. What ungrateful people you all are. If I had my way again I would refuses to take your money, and there is no way I would have sold you one of my houses. I would rather have made my living off the land.

    Honest! I never needed a Merc anyway.

  • Jim says:

    I also forgot to add, this in no way helps anyone who is already caught up in the current crazy system.

  • Jim says:

    Not sure, but do they not mean, if you are considering buying a property & your lawyer does a search (They all do, don’t they???) & finds there is a mortgage on the subjects, the potential purchaser can pay off the portion of the loan outstanding on the property directly to the bank that provided the developer with the original loan. The amount of the purchase price that is left, would go to the developer, or whoever was selling the property. This should leave no burdens on the property. I think the bills also make the taking out of any mortgage after the sale illegal.

    The problem still remains of getting a title deed within a reasonable timeframe. This needs urgent attention.

    Legislation that ensures a clear title deed at point of purchase is vital, if the Cyprus property market is to recover.

  • Unbelievable says:

    Gerry – I would do the same if I knew I was being screwed over for a 25yr mortgage.

    HAND BACK THE KEYS or STOP YOUR PAYMENTS NOW !

    The banks need someone to pay the developer mortgages. They don’t care who, as long as the loans are repaid.

    You must all understand this, developers will go bust and cannot payback their loans.

    YOU WILL LOSE…

  • Gandolph says:

    It’s not that the government can’t come up with anything else; it’s that they won’t come up with anything else.

    This current institutionalised and government backed scam is designed to protect corrupt banks, developers and lawyers and when one considers how many politicians were once lawyers, is it any wonder they refuse to deal with a problem that’s of their own making?

    Let’s stop pussy-footing around and say it as it is; The Cyprus government refuse point blank to deal with a situation that could be rectified overnight.

  • Gerry Thompson says:

    Well it looks like we, the mugs have been **** on again and lets face it you will not get justice in Cyprus for the deeds, misselling, fraud, misleading actions of the developers or anything else.

    So why don’t we all do probably the only action left and that would be to stop mortgage payments and let the island go down the drain. There must be thousands and if the action was started on the same day this would be to massive for any government to ignore and I keep hearing about the EU directives!! What is the EU planning on doing? What action could the banks do when they have been fraudulent in selling a mortgage without informing people of the issues.

    So come on all you action groups lets get united behind this and remove you finances back to your bank at home thus no mortgage payments to the banks (conmen) Power to the people!!!!!!!

  • @CyprusExpat.co.uk – that’s what all the governments have been doing since the 1980s. Leave it to someone else to clear up the mess.

    What amazes me is that they have been looking to solve the problem for many years – and this is the best idea they can come up with!

  • CyprusExpat.co.uk says:

    I think that they are just stretching the saga till the elections are over, and this Government is thrown out, and leaves the mess for somebody else to pick up.

  • Unbelievable says:

    Stuff them all :-)

    Hand back the keys and cut your loses now !

    Better to lose £20K than £120K

    If you’re never, ever, going to get your Title Deed and your property is devaluing rapidly, then why carry on paying good money into a bad investment.

    If you don’t legally own anything in UK, then the banks can’t take anything from you :-)

    IVA – that’s my motto..

  • baileyboy says:

    This proposal does nothing to improve the reputation of the Cyprus Government.

    Are they really so blinkered that they cannot see that this proposal must make the corrupt developers, lawyers and banks (they are not blameless either) think that they have been given a belated Christmas present?

    Shameless.

  • Hector says:

    Let me get this straight. You have a house that you have paid the vendor in full for. You wait many years to get the title deeds. At some stage, despite having had a lawyer, you discover that there is a mortgage incurring huge repayment fees/ non payment penalties on your property. Government says, pay off some of the mortgage (how much?) so you can have the title deeds.

    You now have the property in your name but still subject to the mortgage. So who really owns the property, you or the mortgage company? Who would buy the house whilst subject to that mortgage? What happens if the original mortgage incurs huge penalty fees for non payment? I take it that the mortgage company can still foreclose on the mortgage and auction the property?

    What a brilliant scheme!

  • Clive Fletcher says:

    Does this mean that some time in the future buyers who have paid in full without title deeds will be notified that they have to attend the Land Registry Office to collect their title deeds, pay the Transfer Tax and a percentage of the developers loan(s)on the land.

    They will probably be given six months to comply or lose their “Beneficial” rights to the land in which case the developer eventually sells the property at a price sufficient to pay off the loan(s): perhaps that will be the new property market in Cyprus.

    And Cyprus is going to be involved in the Presidency of the EU!!!!

    Madness!!!!!!!!!!!!!

  • Stuart says:

    Surely Cyprus must be the last place on earth where any sane individual would want to purchase property but will Cyprus lawyers now advise potential buyers accordingly? I think Jim Royle may have the answer to that one!

  • Dee says:

    It is – more or less – making the cheating practices legal. As you say, the developers and banks must be really chuffed; guess who they’ll vote for at the next election.

    Meantime this Charter for Charlatans will be couched suitably in such legalese that they think punters will be deceived and start a buying frenzy.

    Don’t think so!

  • Gavin Jones says:

    These latest ‘proposals’ confirm that the epithets ‘Banana Republic’, ‘Rogue State’ and member of the ‘Axis of Evil’ are well deserved when it comes to describing Cyprus.

    This latest institutionalized scam using convoluted logic proves that skulduggery has become a way of life here and is firmly imbued in the Cypriot psyche…

  • dimitri says:

    These are proposed changes, have they been ratified yet? has there been a vote?

  • desmodromos says:

    Well what did everyone expect, the developers, the banks,the lawyers and the politicians are all in the same club with their hands in each others pockets, the money must come from somewhere and then go on the property merry-go-round keeping all of them happy, except the buyers who have to foot the bills from all these greedy unscrupulous faceless untouchable people who control everything that affects us all on this beautiful island.

  • Harris Samaras says:

    On the new government proposals in regard to the title deed bill: One more time, the inefficiency of the policy makers to enforce existing law (and the lack of vision and know-how) results to unnecessary half measures and unproductive complexity…

    Such proposals will not only “punish” the buyers but at the end of the day the developers themselves! The lack of transparency primarily affects demand!

    I wonder, have any real estate industry experts been consulted? Have they studied what other countries are doing? Why is it so difficult and why does it take so long?

  • arline gray says:

    Well said Nigel and keep up the good work. I am one of the representatives of the Xylofagou property Action Group. Our developers owe the banks 3.5 million and we are 100 households. Personally, even if I had the money I would not pay on principle. I bought my house outright and expected to own the land it sits on !!!!

  • Robert Briggs says:

    Is Mr Nicolaou & his associates taking the p–s?

  • Denton Mackrell says:

    They seem quite child-like in their expectation that these five Bills, with all their defects, will somehow suddenly result in thousands of new foreign buyers flocking back to Cyprus to save the bacon of the developers, banks and the government’s tax coffers. Not on your Nelly!!

    Do they have a ‘Plan B’,I wonder?

  • Paul says:

    The lunatics have taken over the asylum!

    How on earth do the powers that be think that this will solve the problem?

    The only people helped by this lunacy are the banks and the developers i.e. the very people who exploited the situation to their own advantage in the first place!

    Unbelievable!

  • andyp says:

    No need for a comment Nigel. You just said it all above.

    The lunatics have shown their true colours.

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