Latest Headlines

Concerns raised over home repossessions

As the debt crisis continues and property developers fold, some 6,000 cases are pending with the land registry relating to non-performing loans and properties held as collateral and subject to repossession.

THE HOUSE human rights committee on Monday discussed legislation surrounding seizing and selling people’s primary residences that authorities are expected to update with a view to reducing banks’ non-performing loans.

Lawmakers were told there were about 6,000 cases pending with land registry relating to non-performing loans and properties held as collateral and subject to repossessions but were not given a breakdown of how many involved primary residences.

The existing legislations on debtors and forced sales of the immovable property date back to the early 1960s. Cyprus has agreed with their lenders on a series of legislative changes to be submitted to Parliament by mid-2014 and implemented by the end of 2014.

Many buyers are now in trouble as the debt crisis continues and property developers fold. The developers’ land and buildings are counted as assets that need to be offset against their debt to banks, which gives lenders a claim on people’s properties that had been mortgaged by the property developers even if the purchasers paid for their properties in full.

The banks readily lent to property developers, especially between 2004 and 2008, fuelling an unsustainable frenzy of activity which roughly tripled prices. The outdated legal framework enabled property developers to sell on property that was already mortgaged.

Thousands of people still do not have title deeds to their properties, although authorities are expected to eliminate the backlog to less than 2,000 cases by the end of 2014.

The Memorandum of Understanding (MoU) agreed with Cyprus’ lenders as part of a €10 billion bailout for Cyprus states that property pledged as collateral should be able to be seized within a maximum time-span of 1.5 years from the start of legal or administrative proceedings. “In the case of primary residences, this time-span could be extended to 2.5 years,” the MoU says.

Representing the Central Bank, Mary Kyriakidou, told lawmakers that legal action to recover assets by creditors would be launched only after creditors and debtors exhausted all other options.

Kyriakidou said the Central Bank has instructed banks to renegotiate loan agreements, with borrowers having an option to appeal to their lender’s independent commission and ask for a mediation service to find a viable way of meeting their loan obligations.

On behalf of the banks’ associations Demetra Valianti Plati said the banks were not looking to repossess properties per se and added the land registry itself had final say on forced sales. She said that one way to avoid repossessions would be for the bank to take up ownership of a property and then lease it to the debtor with a view of returning the property back to the owner after the loan is paid back.

However, the borrowers’ association Costas Melas called for caution however on any bank scheme that gives banks the final say on what to do with their property.

The finance ministry and the Financial Ombudsman did not attend the meeting, to the annoyance of the committee’s members.

The head of the committee, DIKO’s Sophocles Fyttis, said they wanted to secure people’s rights to their homes while deputy with main opposition AKEL Skevi Koukouma accused the government of pushing to expedite procedures that could lead to people losing their homes.

EDEK MP Roulla Mavronicola said her party was looking to protect by law primary residences up to a certain value.

The House committee will continue the discussion next week.

Concerns raised over home repossessions

Readers' comments

Comments on this article are no longer being accepted.

  • Steve says:


    When we raised questions with the developer about boundary walls and departures from the planning permission, we were told to cool it. We owned nothing, the developer held the title deeds and the decisions on all aspects of the property were his. Apparently this includes the right to use it as collateral to obtain a loan.

  • Andrew says:

    What legal basis was there for Banks to blatantly allow developers non performing loans to go on for so many years. Why did the Banks not ensure payment from developers, when each property unit was built and sold. Why should Banks have any claim on a building when they were not named in any home buyers sales contract.

    If an individual home buyer would fail to repay his or her mortgage, the Banks would have been quick to act. Clearly the Banks were using unwitting buyers as collateral.

    The banks gambled and the Banks should lose. No individual buyer should ever lose his or her home, or investment because of this scam by Banks Lawyers and Developers.

  • Costas Apacket says:

    andyp, I agree and suspect that Johnny Foreigner will not come of of it well.

  • Denton Mackrell says:

    @andyp. If it looks like a duck, walks like a duck and quacks like a duck, then it almost certainly IS a duck. But that could be just me being cynical after 10 years of exposure to the Great Cyprus Property Scandal Denial scheme.

  • Steve says:

    We are told the risk of property being attached by banks applies to about 6,000 pending cases of non-performing loans currently with the land registry. This definition is far too narrow – every property without transfer of title deed is at risk because mortgages are not the only debt that developers have incurred. All income taxes, property taxes, loans or other credit from suppliers, other agreements by developers to buy land in instalments and the speculative building of properties without buyers that now cannot be sold at a profit can all result in developer bankruptcy. Many, if not all, of these creditors would line up in front of the buyers without title deeds in the queue for a share of developers assets.

  • andyp says:

    I fear a Cypriot “cunning plan” coming on similar to the planning amnesty joke.

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


Back to top