HOPES of issuing up to 70,000 trapped property buyers with their Title Deeds were revived earlier this month after banks pledged not to raise objections to a disputed law, but the top land registry official told the Sunday Mail this week he was uncertain how this would work in practice.
In return for the approval last Sunday of bills making it easier for banks to foreclose on property owners in arrears on their mortgages, the Bank Association had promised MPs that banks would accept the provisions of the 2015 law.
The law aimed at helping thousands of owners who had paid for their properties in full but had not been issued with their Title Deeds because the developers had mortgages on the properties.
Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gave banks a claim on properties that had been mortgaged by developers.
“We acknowledge the effort the country and parliament are making and in turn we must also contribute,” Christakis Patsalides, chairman of the Association of Cyprus Banks, told the House finance committee.
But it remains to be seen how this so-called gentlemen’s agreement would work in practice according to the head of the land registry, Andreas Socratous, especially as a Supreme Court decision could scupper the process.
“If this is not implemented in practice then there will not be any result,” he told the Sunday Mail.
As the head of the department, Socratous had been granted under the 2015 law the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions, as the state sought to sort out the Title Deed mess.
However, banks contested the 2015 law and won rulings that it was unconstitutional.
Courts said it violated Article 26 of the constitution, which affords individuals the right to enter freely into any contract.
But then last September, the Larnaca district court upheld the 2015 law, allowing trapped property buyers to obtain their Title Deeds irrespective of the developers’ own commitments to banks.
The confusion suggests that the law could end up going to the Supreme Court for final judgement. That, it is feared, could spell the end of the effort to resolve the issue.
Last week, Disy leader and House finance committee chairman Averof Neophytou warned that he would come down on the banks hard if they breached the gentlemen’s agreement.
Socratous told the Sunday Mail that the land registry had contacted banks asking to know how they planned to follow through on their pledge.
The bank association, he said, had not yet responded.
He said a move that would prove they mean business would be to withdraw the cases pending in court.
According to Neophytou, the agreement should mean that if a buyer has fully paid off his property in good faith, irrespective of whether the developer continues to owe the bank, the bank will stop the objections, appeals, and court procedures and will give their consent to these owners provided the transaction was without deception or fraud involved.
Banks said they would view each case separately.
For instance, there were cases where subcontractors who did work for developers were given flats instead of money, which they probably rented afterwards. They then took advantage of the law and secured a Title Deed.
They also say that in some cases the buyer together with the developer, pre-dated contracts in a bid to get a title, cheating the bank in the process.
These cases do not fall under the pledge and will certainly be contested.
Socratous said predated contracts were not accepted by the land registry as it did not have authorisation to do so.
Such cases had to go to court and prove that all the procedures were above board. If the court was convinced then it issued an order for the department to accept the contract, which it did for a small number of cases.
The director said his department had so far processed around 5,000 title transfers, a job that took about eight months provided that all the criteria were met.
One of the sticking points that cause delays is the absence of a title in the first place. The law also allows for authorities to step in and issue Title Deeds because if it was left to the developer it would never have happened.
That, however, hit the ‘red-tape’ wall since they had to go through the planning office and local authorities, which, according to Socratous, did “not handle the matter with flexibility”.
Such things as the absence of green areas and pavements were reasons for these authorities to refuse to give final permission despite being told that they could issue them with a footnote about the omission or irregularity and chase the owner through court later if need be.
The land registry has so far received 16,000 applications from trapped buyers after the law was put in place in 2015.
Around 8,000 of those developments already had Title Deeds and 5,000 of them have since been transferred to the buyers of individual properties.
For the remaining 8,000, Title Deeds must be issued first before they can be transferred.
The trapped buyers’ issue is not the only embarrassment relating to Title Deeds.
In 2008, officials discovered that over 100,000 Title Deeds were outstanding, a matter also highlighted by international lenders in 2013 when the island sought a bailout.
There were numerous reports at the time – when the government undertook the task of updating property records – of apartment buildings and villas existing where the records showed fields or empty plots.
Since then, the number has been reduced and according to Socratous, they were working hard to clear the slate.
“Whether we like it or not, as a country, we must resolve the problem,” he said.