LARNACA based property developer Stelios Georgiou Property Limited has been fined €70,000 by the Cyprus Consumer Protection Service (CCPS) for breaching the Unfair Commercial Practices law of 2007.
Although we’ve reported similar cases in the past, we believe this one is the first of its kind as it relates to an assignment contract.
An assignment contract is one in which the first purchaser of a property sells it to a second purchaser before the property’s Title Deed is issued. The assignment contract transfers all the rights and obligations contained in the first purchaser’s contract to the second purchaser.
(Assignment contracts were introduced as part of a revised Specific Performance law that came into force in 2011. It overcame a long-standing problem whereby unscrupulous property developers demanded money from their customers who wished to sell thee property they purchased before its Title Deed was issued.)
In this particular case the complainants were the original purchaser and her daughter to whom the assignment was made. The original contract was for the purchase of a plot of land and the construction of a house on that plot.
In their submission, the complainants stated that the property developer failed to reveal significant information concerning the purchase:
- The house was constructed without the necessary town planning and building permits.
- The land on which the house was built was mortgaged, which prevented its transfer to the purchaser.
The original purchaser asserted that if she had known that permits had not been issued and the land was mortgaged, she would not have bought the property.
The CCPS considered the actions of the developer were in breach of the Unfair Commercial Practices law. Furthermore, it concluded that the actual sale of the property was illegal as the developer had illegally signed the contract for the sale of land and construction of the house without having obtained the required planning and building permits.
The CCPS imposed an administrative fine of €70,000 on the property developer.