DEPUTIES mulling legal changes to solve the Title Deeds shambles yesterday agreed on a key provision that would give buyers the right to Title Deeds regardless of pre-existing mortgages on the property.
The House Legal Affairs Committee indicated after a meeting yesterday that important progress had been made on the issue. “We aim to strike a balance between the rights of the buyer and the seller, but also guarantee the rights of mortgagees,” committee chairman Ionas Nicolaou told reporters following a session involving land developers, property owners’ associations, bankers, and officials from the departments of Land Registry and Town Planning.
The House Legal Affairs Committee is currently working on two of five government-sponsored items of legislation geared at overhauling the system. Nicolaou said, however, that each bill was distinct and would be forwarded to the plenum irrespective of progress on the others.
A key provision of the bill, on which there was broad agreement yesterday, gives the buyer the right to have the property transferred to his or her name regardless of whether a pre-existing mortgage on that property has been paid in full.
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.”
Nicolaou said “everyone is in agreement that the sales contract shall have priority over the mortgage, for the purpose of protecting the buyer…from abusive practices.”
An estimated 100,000 properties in Cyprus are without Title Deeds and Land Registry officials have confirmed that 30,000 of these properties have been bought by foreigners, the vast majority being British.
Many of these buyers have been conned into buying property mortgaged by the developers and are left in the lurch when the developers default on their bank loans.
The spirit of the proposed bill is to spell out where the involved parties – the buyer, the seller and the lender -stand in relation to one another, the DISY MP noted. “It explicitly states who has priority and when, and defines an encumbrance [claim on real estate] that is created once a sales contract has been submitted to the Land Registry,” said Nicolaou.
It will be obligatory to present the property’s sales contract to the Land Registry Department before any such transaction can take place.
Regarding current sales contracts that have been signed but not yet filed with Land Registry, Nicolaou said a window of six months would be given for filing contracts after the law is passed. In this respect, the new law would not have retroactive effect.
In addition, on presenting the sales contract to the Land Registry, the buyer will be secure in the amount they have paid to the seller until that date, in the event the seller (developer) is unable to complete the project or to transfer individual units to separate buyers of a housing project.
“On submitting the contract, an encumbrance shall be created with regard to the amount paid up until that moment…and that encumbrance shall give the buyer priority over any other obligations of the seller.” Under the legislative proposal, Nicolaou said, “a buyer will have the right to take legal recourse and request a court injunction ordering the seller to transfer the immovable property to their name.”
“This is a straightforward procedure,” he added.
A poll conducted by the Cyprus Property News Magazine last year found that close to 100 per cent of foreign buyers would not have bought in Cyprus if they had been informed of the practice of withheld Title Deeds and developer mortgages.