NUMEROUS letters have been sent the European Commission Vice-president and commissioner responsible for justice, fundamental rights and citizenship, Viviane Reding, complaining about the unfair practices of the property industry in Cyprus.
Recently, many of those complained have received a reply from the Civil Justice Directorate of the EC:
Thank you for your letter informing Vice-President Reding about the prejudice suffered by you and many other immovable property buyers because of the practices of Cypriot developers, lawyers and banks, and apologies for our belated reply.
Let me first assure you that the European Commission takes the Cypriot situation very seriously.
Although matters of real estate property ownership are primarily within the remit of the Member States and are regulated by their national contract laws, there may be Union legislation applicable to the practices described.
On the one hand, Directive 2005/29/EC on unfair commercial practices985 (the “UCPD”) prevents traders from engaging in misleading and aggressive commercial practices. Its provisions require that traders operate in accordance with professional diligence and that they do not distort the economic behaviour of consumers by inducing them to enter transactions they would not have entered otherwise. Whilst the failure to transfer legal ownership cannot, in itself, be regarded as unfair in all circumstances, such as the practices clearly spelled out under the Annex I of the UCPD (the so called “black” list), whether it nonetheless amounts to an unfair practice in the specific cases at stake is an assessment which should be primarily carried out by competent national authorities and courts, taking into account the applicable national laws regulating real estate property matters.
This being said, the European Commission considers that the lack of pre-contractual information to property buyers about the existence of developers’ mortgages on the Cypriot properties offered for sale is an aspect which can be assessed in the light of Article 7 of the UCPD concerning misleading omissions.
It should however be noted that the UCPD came into application on 12 December 2007, therefore its provisions are not applicable to transactions made before this date.
On the other hand, Directive 84/450/EEC concerning misleading advertising986 was applicable to business-to-consumer relations until the entry into application of the UCPD. This Directive protects consumers against misleading advertising, defined as “any advertising which, in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour”.
I would also like to draw you attention to Directive 93/13/EEC on unfair terms in consumer contracts987, which provides that contract terms should be written in a plain and intelligible language and that a contract term causing a significant imbalance between the parties to the detriment of the consumer shall be regarded as unfair and as such shall not be binding.
Both Directives are applicable to transactions made after May 2004, i.e. after Cyprus joined the European Union.
Cross-border misleading practices and unfair terms fall under the competence of the EU-wide enforcement network established by the Regulation on Consumer Protection Cooperation988. This Regulation establishes a network of enforcement authorities and empowers them to detect, investigate and stop such infringements. In this regard, the national enforcement authority of your country of residence may be able to request further investigation from their Cypriot counterparts.
Should you live in the United Kingdom, I would therefore recommend that you report your case to the British competent authority, whose contact details are the following:
If your place of residence is located in another Member State, you will be able to find the contact details of your national competent authority using the following link and after clicking on the relevant country:
Following previous exchanges of correspondence, the European Commission has sent a request for information to the Cypriot authorities, enquiring as to the actions carried out at national level to address the reported practices and to ensure an appropriate protection of EU consumers.
The reply of the Cypriot authorities, received mid January, is now being thoroughly analysed. Should the information communicated be unsatisfactory, the European Commission will act to ensure its compliance and the protection of EU citizens and consumers, as appropriate.
However, I would like to emphasise that the enforcement of Directive 2005/29/EC, Directive 84/450/EEC and Directive 93/13/EEC is primarily the responsibility of the competent national courts and/or public enforcement authorities. In addition, aspects related to the consequences of illegal practices, such as, for instance, compensation for breaches of national contract law concerning real estate matter and/or abuse of public powers in relation to building permits remain mainly regulated by national law and should hence be brought to the attention of the national competent courts.
Head of Unit
985 OJ L 149, 11.6.2005, p. 22
986 OJ L 250, 19.9.1984, p. 17
987 OJ L 095, 21.4.1993, p. 29
988 OJ L 364 of9.12.2004, p. 1
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