FOLLOWING information received from Denis O’Hare of the Cyprus Property Action Group (CPAG), MEP Daniel Hannan has raised the following question in the European Parliament.
(CPAG has also assisted a number of Liasides clients to lodge cases at the European Court of Human Rights (ECHR) against the Cyprus Government for not protecting their property rights.)
Question for written answer E-012350-13
to the Commission
Daniel Hannan (ECR)
Subject: Cyprus title deeds bank extortion
In response to my previous question regarding Cypriot property title deeds (E?006305/2013), Commissioner Rehn stated that ‘The MoU [memorandum of understanding] therefore envisages a specific deadline for the elimination of the observed backlog. The swift clearing of encumbrances on title deed transfers constitutes an important element of this agreement’.
Is the Commission aware that receivers acting for banks are currently threatening buyers with selling their homes unless the buyers pay off the developers’ defaulted mortgages, their taxes and other creditors?
In the case of the now defunct Liasides developer, involving 230 properties, Alpha Bank’s receivers are informing the buyers that unless they pay off the developers’ mortgages and taxes on their homes, the properties will be sold. Due to the level of debt there will be no surplus funds to compensate the buyers, who will then be homeless. Mortgages, which go back to 2002 in some cases, have not been serviced during this period, yet Alpha Bank has taken no remedial action and these now stand at several times the initial mortgage advanced. Receivers’ fees at 11% of the purchase price are also payable by the buyers.
Most of these properties are illegal due to the lack of building permits or completion certificates, yet it is envisaged that the individual title deeds should be transferred to buyers through the courts. Moreover, the deeds will still be encumbered by the many other claims against the developer as a result of creditor court judgments.
Could the Commission please confirm that this extortion by the banks and their receivers is in direct conflict with the terms of the MoU?
More liquidations to follow
LIQUIDATORS acting on behalf of another bank have received permission from the court to commence proceedings to recover the assets of a bankrupt property development company in the Larnaca area.
Reports suggest that the liquidator has said that foreclosures have been put in place to ‘force property buyers’ to settle developer debts; a conservative estimate of their fees is €15,000 – €20,000 per household.
As well as the mortgage debt owed to the developer’s bank and the liquidators fees, to avoid the sale of their homes, those who purchased property from this developer will also be required to pay his unpaid taxes, which amount to some €540,000.
It is highly likely that more development companies will be forced into receivership as a result of the collapse in the island’s property market and an increase in non-performing loans. More liquidations will follow and assets belonging to those companies, including many homes, will be put under the hammer to repay their creditors.
Answer given by Mr Rehn on behalf of the Commission (added)
The Commission is well aware of the unresolved issue of pending title deeds in Cyprus and it attaches priority to resolving it in the interest of the Cypriot economy, the European taxpayer, and the EU citizens affected by the problem.
To this end, article 5.4 of the Memorandum of Understanding includes several policy actions such as
(a) guaranteed timeframes for the issuance of title deeds,
(b) decrease of the title deed backlog and
(c) acceleration of the swift clearing of encumbrances on title deeds to be transferred.
The leading competent authority is the Department of Lands and Surveys (Ministry of Interior). As the issue of the title deeds and the encumbrances attached to them is a complex one, the co-operation among a number of Cyprus’ public administration units is also required.
The Commission would also like to inform the Honourable Member that the Cypriot authorities have already created a specific framework for dealing with troubled borrowers. Concerns about such dealings should be addressed to the appropriate national authorities, including the Central Bank of Cyprus and the Financial Ombudsman.