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Troika tightens screws on Cyprus property

The troika of Cyprus international lenders will not release the seventh tranche of the bailout loan until Cyprus property buyers who have paid in full have their title deeds transferred within 6 months.

Troika tightens screws on Cyprus property THE SIXTH review of the Cyprus Economic Adjustment Programme sets more stringent and ambitious targets for Cyprus to achieve during the period 2015 – 2018.

The issuance and transfer of Title Deeds to those who have bought and paid for their Cyprus property is high on the list of priorities, with the latest revision of the Memorandum of Understanding (MoU) stating that:

Prior to the granting of the seventh disbursement of financial assistance, the authorities will, after taking into account comments by programme partners, present draft legislation to programme partners, that

  • ensures that property buyers who have paid the purchase price in full, will have their title deeds transferred within 6 months after their issuance;
  • puts obligations on all parties involved to ensure that the procedures releasing encumbrances and transferring the title can operate without delay and as automatically as possible; and
  • provides safeguards against abuse, inter-alia by introducing a mandatory escrow account to route all payments related to a property transaction, as well as adequate compensation for the parties involved, if available.

By end-June, the legislative measures will be adopted by the Council of Ministers.

Furthermore, the CBC will, in close cooperation with Ministry of the Interior, provide to programme partners a financial sector impact assessment regarding title transfers and lifting of encumbrances by end-June.

The authorities will propose legal or contractual standards for property sales contracts and connected loan and mortgage arrangements by end-October, as well as further legislative and administrative measures necessary to incentivize the swift transfer of title deeds by end October.

Although not a pre-condition on the release of bailout money, the bar for dealing with the Title Deed backlog has also been raised:

the title deed issuance backlog of immovable property units with title deed issuance pending for more than six months drops to less than 3,500 units by Q4-2015 (backlog refers to (i) applications, (ii) units that are eligible for the “ex-officio” issuance of title deeds, required certificates and permits). The ex-officio cases will automatically be counted in the backlog from the date the certificate of final approval is being issued by the respective Local or District Authority.

The Memorandum of Understanding (MoU) following the troika’s sixth review contains several other targets that should help to resolve planning issues, ‘hidden mortgages’ and the unacceptable bureaucratic delays in issuing Title Deeds.

(The IMF Executive Board is expected to consider approving the combined 5th, 6th and 7th reviews of the Cyprus economic adjustment programme during its June 19 meeting.)

Readers' comments

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  • houlou says:

    @aggis or Nigel or anyone else & accept my apologies for boring everyone, assuming deeds are actually issued without the need for the developers involvement (he is ‘missing’ so not available to sign anything) would I as a buyer he liable for his c.g.t on the property he sold if I want the deeds? or would the c.g.t be something he should have paid at time of sale to myself and other buyers?

    And if yes my problem I understand the tax office can take the value of the properties built deduct the value of the land they were built on to give a rough guide of the profit he made, but if the developer is missing he cannot provide the cost of actual construction of the project which I believe is deducted from the gain also….what happens in this case? tax office make another assumption like cost to build at the time was 800cy pounds per m2 and use this as part of c.g.t calculation?

    I am in a bit of a pickle now….do I go ahead and pay near 7000 for remedial works that will get me to a final certificate- and division- deeds ready to be collected , only to find at time of transfer that I am lumbered with the developers c.g.t not to mention the ipt……could I see what he owes in terms of c.g.t by visiting a local tax office with my sales agreement?

  • houlou says:

    Dear aggis appreciate reply and tips, been told by municipal administration & person who has ‘dealings’ with them to appeal to the interior ministry on the grounds I mentioned i.e developer has “walked” left us with property that has no cert of final completion (and infringement causing this can be rectified relatively easily) division permit exists and the division will go ahead but is dependent on the cert of final completion….AND in his absence I want the right to rectify mess and be able to subsequently sign any docs etc that relate to issuance of deeds….they also actually mentioned the m.o.u and the need to push for deeds , and be silly not to accept request as ultimately my push for deeds will mean money for the state coffers at transfer time.

    May sound very time consuming but the appeal will be accompanied by an approved civil engineers/architects assessment of mess and proposed solution, thus alleviating the need for ‘tons’ of paperwork to slowly move between one govt dept and another until a decision is made. Suffice to say the municipal admins tech persons who issued certificate of non compliant works, merely highlighted the building infringement and made no attempt to suggest solutions as they should have! will inform Nigel if I have any luck…..hopefully can help other stuffed buyers too

  • Aggis Demetriou says:

    Dear Houlou sorry to hear your in such a mess.

    We had something like this in London in 1988/1999 where I bought 11 flats on a lease in a block and the freeholder went missing “absentee freeholder”, but being UK the government/land registry managed to change the law permitting leaseholders to step in and take over the freehold.

    What I would do to start with is sue Mr Hasikos for failure in the current system.

    1, Banks negligent for not collecting money owed from developer
    2, Tax office for not collecting overdue taxes
    3, Land registry for taking your money for depositing your sales contract, which to me is little or no protection

    The list is endless, its just a dumb place to buy a property without a title, the banks make a fortune out of this with the bank guarantee’s they sell each year it’s a a big conspiracy.

    In a normal process to get final approvals/titles here on new properties it takes from start to finish minimum of 6 years.

  • houlou says:

    Dear Nigel & aggis demetriou, have asked this before so please excuse me,but if developer has absconded and neither buyers (of properties he has built and delivered) or authorities can find him, & he has left buyers in limbo due to a building infringement that prevents cert of final completion, is this grounds for appealing to Mr Hasikos?

    IF the appeal is a success, and you as a buyer are permitted to submit building plans…these plans accepted for remedial work to comply and works done and approved and a cert of completion issued….
    AND division permit that exists is actioned, what happens next if developer is still a.w.o.l?

    Would there be any possibility that the buyer who is due his deeds could be called to collect instead of the developer? if yes what would happen regarding the tax clearance certificate for the developers c.g.t , obviously if the developer is missing and hasn’t paid it, would the buyer be burdened by this before the deeds and transfer of ownership.. trying to wrap my head around this. If the developer did appear but had no money for the c.g.t would transfer be withheld?

  • @chris on 2015/06/16 at 1:47 pm – Sadly, this wouldn’t work. The banks have already pursued those who have defaulted on their loan repayments. Just handing the keys back will not resolve the problem – it would merely put those people’s homes at risk.

    It isn’t only overseas buyers who are affected, many more Cypriots have been affected. We’re all in the same boat together.

  • chris says:

    The only solution to resolve this fiasco would be for the ten thousands of overseas property buyers with mortgages to hand in house keys to the developer who is by law the guarantor of the housing loan and walk away. This is extreme circumstances but is the only way for the Cypriot establishment to take immediate action or face the consequences.

  • @Abraham Gerges on 2015/06/15 at 9:36 am – I have heard of overbuilding elsewhere – the developer can make more money by selling the extra houses he builds.

    One possible way out of the problem is to submit a new planning application for the development as it has been built. If the application is approved you can then submit applications for the building permits. It is probably worthwhile getting a decent architect to visit the development and get his opinion on the matter before spending money on getting plans drawn up.

    If you can’t get planning permission/building permit nothing can be done as the system stands at the moment. I guess you could also appeal to the Interior Minister.

    The architect is responsible for ensuring the development conforms with the permissions and permits issued for its construction. But as he is employed by the developer, he’s unlikely to highlight a problem as he would lose his job.

    There are just not enough staff in the planning departments to check construction work as it progresses – the system is very unsatisfactory.

  • Abraham Gerges says:

    Hello Nigel,

    I bought my property from the infamous “Famagusta Developer – Paralimini”, the developer is in prison for few years.

    We paid fully for the property but still unable to have the title deed after 11 years.

    The core problem is that the developer got a permit for 4 houses but he changed the plan later and built 5 and as far as I know he has no mortgage against the whole block. In short, it is a permit related issue.

    I checked with all relevant government ministries and could not get a solution.

    Another owner tried to resolve it through a lawyer but in vain.

    How this could be resolved? How common is this malpractice? it is not really strange that developers dare to do that? and why the authorities only check at the end?.

    I really wish to sell it and finish this story.

    Thanks for your reply

  • @pils on 2015/06/14 at 11:45 pm – You will have to pay the Property Transfer Fees to secure title (ownership) of the property – and vendor’s tax liabilities (IPT and Capital Gains) have to be settled before the transfer of title can take place.

  • pils says:

    Nigel – title deeds available after 9 years someone mentioned that title deeds are available free but IPT money outstanding still to be paid. Is this the case? please advise

  • @Pete on 2015/06/14 at 1:35 pm – I know your case well and I’m surprised the liquidator has gone quite. I suspect TPTB may have intervened.

    We’ll have to wait and see what the new law actually says – the devil will be in the detail.

  • Pete says:

    Hi Nigel, hopefully you may be able to give an opinion on our particular circumstances.

    Our developer shut up shop after gaining a number of loans over a period of around four or more years, none of which was ever repaid. Despite paying in full for our homes, the bank have previously applied to sell them and ‘the creditors’ appointed a liquidator. The same man also acts for the bank as their receiver, can they do that?

    It appears title has been issued to the liquidator but no one has heard a thing for a couple of years and if Mr Hasikos’ promised reforms become law, we suspect we’ll be told to pay substantial amounts to the liquidator even though we had not part in his appointment. And to top it off, the Official Receiver in Cyprus does not consider us as creditors, even though we’ve not only paid in full but paid many thousands extra to finish our homes and install roads etc.

  • UBoat says:

    @ Stuart
    June 13, 2015 at 3:18 pm
    Well said !

    Its not just the issuance of the title but the BACKLOG as well We have been waiting around 12 years for our Developer to complete the site (Finish the roads, Finish the Government boundary green areas. Then he built 3 new villas on our big government green area against all our complaints one of which has never been sold let alone completed. So this is how they get around the issue of the completion certificates of the development and dont release the title to the rightful owners who have paid in full).

    So who is over seeing the developer to complete the site according to the contracts of sale ?????? No ONE as far as I can see.
    Hence the backlog.

    Build, complete, sell, hand over in full !
    Its to easy ?

    That way the Government get the TAX etc etc etc

    We get our rights to our purchases etc

    But oh!!!! wait a minute … The developers lose the property portfolio and the titles and the power to be able to borrow money against the title of the property which they have sold and received full payment. Then the developer is a bit short of cash so he borrows against a sold property (we all now know how) and the title is even more encumbered. No chance of getting a clean title as the money borrowed is used for a life style boost and not invested in new land or building as the bottom has dropped out of the market and no chance again of ever the developer paying it back. But he knows no problem I just sit tight and the new owners of the property whose tilt was used as security will pay it back for me …. SIMPLES !!!

    Corrupt more like rotten to the core!

    Sorry I digressed a little but it had to be said.



  • @chris on 2015/06/14 at 4:28 am – Nothing yet. As soon as I have a reply, I’ll publish something.

  • chris says:

    Nigel did you ever receive any response back from your detailed letter highlighting the extreme problems faced with transfering title deeds to the rightful owners. Surely the establishment must see that until this mess is finally sorted out thr Cyprus property market will never recover.

  • @Linda Leblanc on 2015/06/13 at 4:50 pm – Is this the Harbour Shore Estates development? I think they’ve been waiting for deeds to be issued since 1979?

  • @Magna Carta on 2015/06/13 at 9:36 am – If you’re a home owner the Title Deeds to your property will cost you €10.00.

    If you don’t own your home you will need to pay the Property Transfer Fees to secure ownership (there is no charge for the deed and it will be sent to you in the post).

  • Aggis Demetriou says:

    What a load of rubbish, I have 9 titles obtained over 6 months ago and none of the purchasers want to come to the lands office for transfer – there is no law to say come and get your title.

    Another reason why titles should be available at time of sale.

  • Linda Leblanc says:

    This confirms what I’m hearing & seeing in Pegeia. One long-standing case with hold-ups (a complicated Leptos-owned company, 288 plots in Coral Bay, hundreds of people), is finally being pushed hard by Director of Land Registry in Nicosia. Several deadlines earlier this year were bypassed with Leptos not complying but he’s recently been given the end of June to sort out the required work needed to issue division and completion certificates. Ultimatum is: if not done, Land Registry will issue the certificates themselves.

  • Stuart says:

    The Cyprus authorities do not seem to be in the least bit phased by the withholding by the Troika of tranches of bailout funding. In fact they have already stated that future tranches are not a critical issue for them so they will be pleased to see that they now have the period 2015-2018 in which to fudge the issues still further.

    Even if they manage to introduce legislation to ensure Title Deeds are provided to purchasers within 6 months of issuance in future, there is still the Title Deed issuance backlog to be reduced and ultimately eliminated. However, we see that this historical crisis which was supposed to be tackled by Q4-2014 has now been re-targeted for Q4-2015.

    Since there is no punishment or suspension of bailout money for failure to progress this vexed topic, we will no doubt expect to see the customary ineptitude prevail yet again and be rewarded by still further exercises in target practise.

  • Hector says:

    So will this just lead to fewer or long delays in ‘certificates of final approval’ being issued?

  • Deanna says:

    Oh my word: never thought I’d live to see this in print. There’s hope yet!

    Thanks for the uplift Nigel :)

  • Steve R says:

    What about our scenario. A development of 8 properties. 7 have been developed and the developer sold the 8th plot to an investor who has no intention of building on the plot any-time soon. The rest of the development was never finished, no roads, footpaths, drainage and boundary walls but the developer was paid in full for all the properties. He has since fled the island and the company is in liquidation. What I am trying to get at is, that all our properties have been paid for in full but we have no chance of getting our title deeds. We are therefore not protected by the new laws.

  • UBoat says:

    Well that is actually good news for once.

    Again I must follow that by saying I wont hold my Breath for any thing positive to happen and I actually get my Title deeds….. SORRY to say I have NO FAITH in the system any more.

    I fail to see why this was not done years ago !

    The only reasons I can clearly see is that the developer dose NOT want to let go of the land or the ability to borrow against it ….. Hence keep the money and power in their hands….. Once the portfolio of property has gone 99 percent of developers now wont be able to buy any more because they have NO money….. it’s disappeared and that means no business for them or fancy life style paid for by US !

    But otherwise Good news !

  • Mike says:

    Well, there’s nothing like the threat of no cash to ensure everything is done to negate the threat. However being a sceptic, borne out of too many years of Cyprus’ modus operandi (67 of them) I would expect a series of ducks and dives in the form of ambiguous legislation which will satisfy the wording of the MOU but also protect the large Developers and Banks. If all property paid for in full was transferred off the books and consequently cannot be claimed as collateral value then the Banks and Developers would probably, on balance sheet, be in far deeper blank than they already are.

    I sincerely hope title is transferred to buyers, in order to re-establish some form of integrity and belief into the process and system but I will believe it when I see it. Good luck to all concerned, my fingers are crossed for you.

  • Magna Carta says:

    So will home owners still have to pay for their title deeds? If not what about all the people who have done so, will they get reimbursed? Especially that even though one is meant to pay a percentage of the purchase price the government office inflate this as they take an average of what your type of property was worth at a certain time.

  • @PaidInFull on 2015/06/12 at 1:27 pm – We’ll have to wait until details of the law have been published – the devil will be in the detail.

    However it is encouraging that Hasikos said in a statement to the media last month that the new law would “truly safeguard those who paid for their homes in full or who have been consistent in regard to their obligations to the seller, but still cannot get the title to the property.”

    I infer from his statement that if the developer has received all the money from the purchaser or the bank (if the home buyer took out a loan to buy) or if the purchaser has fulfilled their contractual obligations to the vendor, you will be safe.

  • Nick says:

    Well, well, well . . . Fingers crossed, chaps.

  • PaidInFull says:

    Nigel can you please advise what paid in full means.

    To me that means everyone!

    If you have a housing loan then you have paid for the property in full and the banks should be holding the full unencumbered deeds for release to me when I make the final payment on the loan.

    The deeds are issued by the ‘Government’ and when I entered into an agreement with the bank for a housing loan the arrangement it is nothing to do with the Government. The Government needs to ensure that everyone has their deeds within 6 months and that the banks retain them until the housing loans are repaid.

    If I fail to make the agreed payments for the housing loan I expect the bank to sell my property (within say 3 months of my default) and pursue me for any shortfall. Obviously under these circumstances I never expect to see the deeds.

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