Unfair contracts languishing at Legal Service

George Psyllides
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3
Unfair contracts languishing at Legal Service

DOZENS of cases relating to contracts apparently containing unfair terms, mainly with banks and developers, have been languishing at the Legal Service for the past two-and-a-half years instead of being brought before court for the request of an order for their removal, MPs heard on Tuesday.

The issue was discussed at the House commerce committee, which was informed by the Cyprus Consumer Protection Service that 52 decisions relating to unfair terms in contracts had been forwarded to the Legal Service.

The decisions had been issued since 2010.

Until two years ago, complainants could take the decision and claim their rights, but following a change in the legislation, courts can now issue orders for the decisions to be enforced.

A similar case relates to unfair interest rates imposed by co-op banks, which were forced to return some €100m to customers.

Committee chairman Angelos Votsis criticised the delay in pursuing final decisions on the cases.

“Unfortunately, we have noticed that despite the correct work done by the consumer protection service, the next step has not been taken,” Votsis said.

He said the next step would be to take the companies to court if they fail to accept the service’s decision.

“None of the cases has been led to court and we have decided in the next meeting, after the presidential elections, to have the Legal Service come before us so as to see the next steps,” he said.

MPs were told that a state attorney has recently been appointed to handle these matters and the first cases will be brought to court soon.

Further reading

Decisions taken by the Cyprus Consumer Protection Service (CCPS) (Greek)

November property sales up 39%

Nigel Howarth
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3
November property sales up 39%

Cyprus property salesTHE NUMBER of property sales during November rose 39 per cent compared to November 2016 according to official statistics published by the Department of Lands and Surveys earlier today.

This rise follows a rise of 18% in October, an 8% rise in September, and a 27% rise in August.

During November a total of 906 contracts for the sale of residential and commercial properties and land (building plots and fields) were deposited at Land Registry offices across Cyprus, compared with the 651 deposited in November 2016.

Sales rose in all districts. In percentage terms Famagusta led the way with sales up by 174% and sales in Nicosia (the capital) up by 98%. Meanwhile sales in Larnaca, Limassol and Paphos rose by 32%, 29% and 16% respectively.

Total Property Sale Contracts – 2016/2017 Comparison

District Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Nicosia 2016 54
 79
 82
 79 82 98 102 64 81 80 86 144
2017 72 73 79 80 118 162 124 76 87 117 170
Famagusta 2016 22
 35 33
 35
 24 34
 27 41 32 47 19 87
2017 21 19 40 29 38 46 59 47 57 51 52
Larnaca 2016 78
 108 121
 127
 103 120
 123 81 121 111 114 153
2017 102 100 113 69 119 96 103 88 107 111 151
Limassol 2016 92
 179 197
 166
 145 222
 220 129 195 270 249 432
2017 132 177 232 192 298 304 289 201 203 306 321
Paphos 2016 81
 100 106
 107
 120 183
 153 136 127 126 183 318
2017 96 87 162 136 183 235 184 160 148 183 212
Totals 2016 327
 501 539
 514
 474 657
 625 451 556 634 651 1,134
2017 423 456 626 506 756 843 739 572 602 768 906

During January to November the number of contracts for the sale of property deposited at Land Registry offices has risen 21% to 7,197 compared to the same period last year.

Although sales in Larnaca have fallen by 4%, they have improved in the other districts.

Sales in Famagusta are up 32%, sales in Nicosia are up 31% and sales in Limassol and Paphos are up 28% and 26% respectively.

Property sales have been encouraged by the reduction in Property Transfer Fees, the abolition of Immovable Property Tax. Non-EU citizens wishing to obtain residency or a Cypriot passport are taking advantage of two government schemes.

(The figures above include ‘non-sale’ agreements such as loan restructurings, recoveries and debt-to-asset swaps agreed between the banks and defaulting borrowers.)

Specific Performance Law – depositing contracts

Nigel Howarth
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1
Specific Performance Law – depositing contracts

INTRODUCED in 2011 the ‘The Sale of Immovable Property (Specific Performance) law’, N81(I)/2011, replaced an earlier ‘Specific Performance’  law that enabled unscrupulous vendors to exploit their position.

The new Specific Performance law contained a number of changes designed to provide added protection to those buying property in Cyprus and assist them to secure its Title Deed.

For example the ‘old’ law resulted in many thousands of people being duped into buying property in Cyprus built on land that the developer had earlier mortgaged to the bank; resulting in the so-called ‘trapped buyers’ of which there are a reported 70,000 cases.

The new law extended the time from the date at which a contract was signed to being lodged at the Land Registry from three months to six months. In addition, it gave a six-month window of opportunity enabling signed contracts that had not previously been deposited to be lodged at the Land Registry irrespective of their age and without the need for a court order.

However, once that six months had passed a court ruled that contracts dated before the new law came into force could no longer be deposited at Land Registry offices for Specific Performance. This left many buyers unable to register their claim to the property.

Fortunately an amendment (N. 48(I)/2017) to the law earlier this year enables those previously unable to deposit their contracts for Specific Performance to seek a court order. If the court considers the request to be fair and reasonable to protect the buyer, it will issue an order enabling the contract to be deposited at the Land Registry regardless of its age.

Paphos marina – call for President to intervene

Bejay Browne
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2
Paphos marina – call for President to intervene

Paphos MarinaCALLS for the president to intervene over lengthy delays to the construction of a much-anticipated Paphos marina at Potima are being made by the Kissonerga community council.

George Stylianou, mukhtar of Kissonerga, told the Cyprus Mail that the local authority is calling on the president to personally intervene to ensure that the construction of the multi-million euro facility can go ahead as quickly as possible.

“The continued delays mean that we can’t make any decisions concerning development projects and the upgrading of our beachfront area, as well as the construction of much needed breakwaters,” he said.

He added that the council is currently drafting a letter to be sent to the president next week.

In the latest development, the Poseidon consortium, whose bid was rejected in April, has launched an action against the administrative marine management committee.

Stylianou explained that the committee referred Poseidon’s bid to the attorney-general for his legal opinion.

“They had to provide documents for the project and the attorney-general found they weren’t sufficient, so they awarded the contract to Pafilia who were next on the list,” he said.

However, although Pafilia deposited all of the necessary documents in time, which also show they have sufficient funding for 60% of the project as required, no decision can be made until the court action by the Poseidon consortium is concluded, he said.

“The attorney- general has already given his opinion on this matter, and we shouldn’t have to wait again. Our opinion is that the authorities should proceed to the next tender bid on the list, which is Pafilia,” he said.

The Pafilia bid’s design will cost around €175 million euros, and the tender has gone through turbulent times due to the various recourses to the Supreme Court.

The tender for the project was first announced in 2007, and in 2008 it was initially awarded to the Cybarco-Pandora consortium, which includes the Leptos Group.

However, the other two bidding consortiums, Pafilia and Poseidon, a joint venture in which Aristo Developers is a major stakeholder, challenged the award at various stages. They claimed the winning developer used inside information to offer a lower figure for the construction of the Paphos marina.

The project was then frozen after litigation began in 2008.

In December 2015, the Supreme Court voted in favour of Poseidon and their €215m project. They then had to provide proof of funds – a total of 60 per cent of the amount, which was set at €125m.

However, after many months of negotiation, it was decided that Poseidon was unable to meet the financial criteria, and the project then passed on to Pafilia, the biggest developer in Cyprus.

Stylianou said that the local council is fed up with the delays and that asking for the same opinion for a second time will waste more time.

“This is holding us back. We want to start our plans for our beach and for the ten breakwaters in the sea, but these can’t be built until the marina has been constructed,” he said.

He said the council believes vested interests in the island’s three other marinas and a state of ‘political cannibalism’ are creating long delays.

“People are afraid to take decisions and they want to be covered, everyone is accusing everyone, but if they can’t take decisions they should resign,” he said.

Stylianou stressed that it’s time for the president to take a stand and also for prospective presidential candidates to air their opinions on the issue ahead of the upcoming elections.

“Contracts should have been signed ten years ago and by now the economy would be reaping the benefits,” he said.

Reduced VAT on property purchase

Nigel Howarth
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0
Reduced VAT on property purchase

THIS INFORMATION leaflet from the Tax Department provides a general guidance on the purchase/construction of a new dwelling in the Republic of Cyprus.

For any further information or special advice, please contact our VAT District Offices in all towns.

Introduction

As from the 1st of October 2011, a reduced rate of 5% can be imposed on purchasing or construction of a dwelling in Cyprus, as long as the dwelling is used as the principal and permanent residence in the Republic by the beneficiary.

The reduced VAT rate of 5% applies on the first 200 square meters of the buildable area of the dwelling. In cases of large families (minimum of four children) the total area of the dwelling is enhanced by 15 square meters per each additional child (over three children).

On the approval of the relevant application submitted to the Tax Department an appropriate certificate is issued. The application form is only available in Greek.

Beneficiaries

Individuals who:

  • Have completed their 18th year of age on the date of applying for the reduced rate;
  • Acquired the property for use as their principal and permanent place of residence in Cyprus;

Prerequisites

  • The application for a planning permit (or a building permit where no planning permission is required) must be submitted to the competent authority after 01/05/2004.
  • The application must be submitted before the applicants have moved in the dwelling.
  • If the beneficiary has received a grant under the Special Grant (Purchase or building of a Home) Law, he or she is not entitled to apply for a reduced VAT rate before the expiration of 10 years from the time he/she received the sponsorship, unless he/she attaches a certificate from the Grant Agency that he/she has reimbursed the grant or part there of it, accordingly.

Supporting Documents

Documents Issuing Body Comments
1 Application (in Greek language)
2 A copy of civil identity card /passport for foreigners.
3 A copy of a marriage certificate. For foreigners translated by the Cypriot Information Service (CIS) or the corresponding embassy.
4 A copy of a spouse?s identity card / passport for foreigners.
5 Contractor’s annual license for the construction period. Copies of all years of construction.
6 A copy of planning permit (if no, building permit). Department of Town Planning and Housing (Municipality if it is a building permit)
7 A copy of the application for the acquisition of a planning/building permit. Department of Town Planning and Housing (Municipality if it is a building permit) A copy of the application is attached on the set of documents you receive along with the permit.
8 Stamped Sale Contract by the Stamp Duty Tax Commissioner. Tax Department Original contract ? stamped cost about 1.5 ? on the value of the contract. ?2 stamped copy, is also required with the application
9 Contractor’s offer. Contractor Only in case of construction
10 Area plot. Architect of the project. For single land development, the peak list as submitted to the competent authority for issuing permits
11 Evidence proving the purchase/constructing of a dwelling. Contractor Advance payment / invoice or loan application approval
12 Copy of land title deed. Department of Lands and Surveys.
13 Copy of the application for a building permit. (VAT number of the consultants involved must be listed) If, a copy of the application for planning permit is submitted, please ignore this item.
14 Copy of building permit. Town Hall for Building Permit or Urban Planning Department.
15 Copy of the MU1 registration in the case of European citizens or MU2 residence permit in the case of non European Citizens. Provincial Administration.

Deadline for submitting the application

If the property is under construction (off-plan) the reduced VAT rate application can be submitted at any time during the construction of the dwelling.

In cases of purchasing new-build properties the application must be submitted before the first occupation of the dwelling by the buyer.

Important Note

It is essential to underline that in cases where the reduced VAT rate is granted, the residential property must be used as the applicant’s principal and permanent residence for a period of 10 years.

If the beneficiary person ceases to use the dwelling as a place of residence earlier than 10 years he shall, within 30 days from the date he ceases to use it as a place of residence, notify the Commissioner and pay the difference between the amount of tax resulting from the application of the reduced rate (5%) and the standard rate as applicable on the date of supply or construction of the dwelling (now 19%), which accounts for the period he has not used the dwelling for the purposes of residency, except in case of death of the beneficiary person or in case of a transfer by the person entitled to any adult child, as long as the child is not a beneficiary person at the time of the transfer.

Legislation (in Greek Language)

Law – ????? 95 (I)/2000, ?.119(I)/2016

Circulars – E.E.210, E.E.212

Tax Department Information Leaflet (English)

Another stab at resolving the Title Deeds mess

Elias Hazou
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11
Another stab at resolving the Title Deeds mess

Cyprus Title Deeds protestTHE GOVERNMENT will take another swing at fixing the problem of ‘trapped’ property buyers, after a law passed in 2015 failed to adequately address the Title Deeds mess.

In parliament on Monday, land registry director Andreas Socratous said an amending law has been drafted whereby, in order for a bill of sale to be submitted to the land registry, the property in question must be free of any encumbrances.

In the wake of the law on forced property transfers, said Socratous, some 15,000 applications were filed, of which only 7,000 had a Title Deed.

Of these 7,000 properties, around 3,500 have since been transferred.

The 2015 law aimed to sort out the mess created by the failure to issue Title Deeds to people who paid for their property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.

Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gave lenders a claim on people’s properties that had been mortgaged by developers.

The land registry estimates there are 70,000 of these trapped property buyers.

The 2015 law granted the head of the land registry the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions.

But following a string of court decisions, where banks objected to the law, the land registry had suspended procedures, as authorities contemplated their next move.

Nonetheless the attorney-general’s office had instructed the departments involved to continue implementing the law while appeals are filed at the Supreme Court, which will have the final say on the matter.

According to Socratous, to date the banks have brought around 250 cases to court. A significant proportion of the cases involve Alpha Bank, he said.

Some of the court cases have been won by the banks, largely on the grounds that the buyer’s claim on the property infringed on the contract between the bank and the developer.

But in September, the Larnaca district court did uphold the 2015 law, allowing trapped property buyers to obtain their Title Deeds irrespective of the developers’ own commitments to banks.

Due to the confusion and mixed signals in the wake of the law, the government is now looking to iron out the kinks in the legislation.

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