Government intervention is needed to stop Credit Acquiring Companies, better known as Vulture Funds, demanding money from debt-free trapped buyers to release title deeds for the properties they purchased.
(“Vulture” is a metaphor that compares vulture funds to the behaviour of vultures, birds that prey on carcasses to extract whatever they can from their defenceless victims.)
Elikkos Elia, the permanent secretary of the interior ministry, said on Wednesday that “progress” is being made in addressing the challenges faced by Cyprus’ estimated 9,497 trapped buyers.”
But tell that to the 5,417 trapped buyers still waiting for their title deeds. While the government drags its feet, Vulture Funds are demanding money from some of them.
Who are trapped buyers?
These are people who paid for their homes in full, only to find out they couldn’t get title deeds because developers or previous owners had saddled the properties with mortgages. These buyers are now caught in a nightmare they never saw coming.
Here’s how buyers got trapped:
No legal advice – Some buyers chose not to hire a lawyer when purchasing property, trusting the honesty of the vendor and believing they were saving money. Without proper legal advice, these buyers unknowingly put themselves at significant risk of becoming trapped.
Poor legal advice – Lawyers instructed by buyers often failed to conduct proper due diligence. This would have uncovered issues like outstanding mortgages, other debts and legal disputes. (Due diligence involves checking title deeds, identifying debts, confirming the vendor’s reputation, and verifying a property’s condition and value.)
Conflict of interest – In some cases, lawyers worked in the interest of vendors rather than protecting their clients (the buyers). They used vendor-prepared contracts that heavily favoured the seller, leaving buyers exposed with very little to no legal protection.
Bank waivers
Buyers whose lawyers conducted proper due diligence discovered that their vendor had mortgaged the property. While some buyers walked away, others sought bank waivers – agreements where the lending bank waived its rights to repossess the property if the vendor failed to repay the loan.
While waivers allowed buyers to eventually obtain title deeds, they came with limitations. For example, if the buyer wanted to sell the property before receiving the title deed, the new buyer would need to apply for their own waiver, as waivers are not transferable.
Non-performing loans and Vulture Funds
To address their high levels of non-performing loans (NPLs), Cyprus banks sold much of this distressed debt to Vulture Funds.
- Vulture Funds specialize in purchasing non-performing loans at a steep discount – believed to be between 15% and 20% of their original value.
- This helped Cyprus banks reduce NPL ratios from 49% in May 2016 to a record low of 6.8% in August 2024. While this was a success for the banks, the consequences for buyers have been severe. These distressed debts included the underlying non-performing loans on properties purchased by trapped buyers.
Vulture Funds use aggressive tactics to recover more than they paid for these loans, including legal action, demanding repayments, and seizing assets like real estate.
Debt-free trapped buyers targeted by Vulture Funds
Buyers who are debt free are now being pursued by Vulture Funds. These funds are demanding additional payments, despite buyers having paid in full for their properties (and have proof of payment).
- In one case, a Vulture Fund demanded over €20,000 from a trapped buyer.
- In another, a trapped buyer was asked to pay €5,000.
These Vulture Funds also demand proof that payments were made directly into the developer’s bank account, even though developers ceased trading over 15 years ago and the records demanded are no longer available.
No transparency, no accountability
These Vulture Funds don’t tell buyers how much debt is linked to their property or how they calculated it. They operate in total secrecy, bullying people who have done nothing wrong.
Government must step in
This situation is scandalous. The government must stop these vultures from destroying lives by:
- Banning them from targeting trapped buyers who have already paid for their homes.
- Forcing complete transparency on debt claims.
- Protecting debt-free trapped buyers from losing their homes.
Trapped buyers have suffered long enough – it’s time to end this exploitation once and for all!
