Clearly, House Committee Chairman Ionas Nicolaou has failed to achieve the stated aim of: “striking a balance between the rights of the buyer and the seller.”
According to Mr Nicolaou the bill “gives the buyer the right to have the property transferred to his or her name regardless whether a pre-existing mortgage on that property has been paid in full.”
As to how this would work in practice, Mr Nicolaou explained:
“Having calculated their participation in the share of the loan for which there is a mortgage preceding the sales contract, buyers will be able to propose settling that amount to the lender on behalf of the seller.”
“Once such payment is made, for the purposes of a specific performance [court order] it shall be deemed to have priority over any mortgage.”
“A court will be able to order that the real estate be placed in the name of the buyer irrespective of whether the mortgage has been paid in full.”
In other words, if a buyer has been conned into buying a mortgaged property he can get its Title Deeds by repaying a proportion of the mortgage to the mortgagee; i.e. the financial institution that loaned the developer the mortgage.
Does this strike a balance between the rights of the buyer and the seller as Mr Nicolaou claims? I’m sure the banks will be happy to get the money and the developers will breathe a sigh of relief knowing that part of their debt has been cleared.
But what about the buyer who has been conned; not only does he have to pay for his house but he also has to repay part of his developer’s mortgage to receive his Title Deed!
There is another point that the Deputies have not taken into consideration:
If the vendor, or anyone else involved in the sale of a property, withholds the fact that a property is mortgaged they would be violating Directive 2005/29/EC ‘Unfair Commercial Practices Directive’.
The Directive states that it is a violation for a business to omit or hide material facts from buyers, which if had been made known, would have influenced the buyer’s purchasing decision. As the poll we conducted last year indicated, 98% of the 1,036 respondents said they would not have bought a property in Cyprus had they known the land on which it was built was mortgaged.
This EC Directive was transposed into Cyprus laws 103(I)2007 and 107(I)2007 and came into force on 12th December 2007; the competent authority in Cyprus being the Commerce Ministry’s Competition and Consumer Protection Service.
This raises the question of why the Government has proposed this half-baked bill rather than using existing laws to pursue nefarious developers, and others, who have broken the law?
Conclusion
Rather than taking action against the law breakers, this bill supports their nefarious practices while graciously allowing deceived property buyers to pick up the bill.
It is sheer lunacy!