New obstacle to solving Title Deeds mess

George Psyllides
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8
New obstacle to solving Title Deeds mess

Title Deed messTHE STATE Legal Service is considering its next moves after a court ruled that the law designed to help so-called trapped property buyers obtain Title Deeds clashed with the constitution.

State attorney Theano Mavromoustaki told members of the House legal affairs committee on Wednesday that no final decisions were taken and a new meeting with all parties involved was scheduled for June 16.

The 2015 law aimed to sort out the mess created by the failure to issue Title Deeds to thousands of people who had 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.

“There is no final decision on whether an appeal will be submitted,” she said.

Mavromoustaki said the Legal Service was leaning towards discussing changing the law while the attorney-general was against continuing to enforce the law before decisions were made.

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 2015 law grants 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.

The bill had been contested by banks from the onset and a Paphos district court upheld their position two weeks ago that the power given to the head of the land registry was unlawful.

The appeal was filed by Alpha Bank against a Paphos developer and a British couple.

The court said the law violated Article 26 of the constitution, which affords individuals the right to enter freely into any contract.

It also said lawmakers have no right to intervene in contracts that preceded the law.

Ruling Disy MP Demetris Demetriou said his party wanted to come up with a bill that would overcome the constitutional issues raised by the courts.

Demetriou said 14,000 applications had been lodged after the law was passed with 2,500 already fulfilled and 3,500 being at the last stage.

Paphos District Officer to mediate Pegeia deadlock

Bejay Browne
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2
Paphos District Officer to mediate Pegeia deadlock

THE PAPHOS District Officer will mediate at a meeting due to be held next week between Leptos developers and Pegeia municipality concerning a deadlock over a number of long standing issues between the two parties, according to officials.

In particular, issues concern access to popular Coral Bay beach, the operation of the two kiosks there and the long-standing issue of title deeds for hundreds of properties in the area, which are owned by Harbour Shore estates, a company acquired by Leptos around 17 years ago.

George Leptos confirmed to the Cyprus Mail that along with the mayor of Pegeia, Marinos Lambrou, he would attend a meeting held by Mary Lambrou at the Paphos District Office on Tuesday to try to resolve any outstanding issues between them.

“We have been holding productive discussions with the mayor and any issues between us, I’m sure can be resolved. There has always been goodwill from our side for many years,” he said.

Pegeia councillor, Linda Leblanc said that the move came following an emergency council meeting held on Thursday evening which resulted in a majority decision by the council that ongoing negotiations had reached a deadlock.

She said that Lambrou acting as a ‘go between’ was a positive step, as facilities at the usually packed Coral Bay beach are minimal. She added that for years the municipality has had to rely on generators to supply electricity, as the developer has not permitted electricity or water supplies to run across their land which overlooks Coral Bay and has been used as a car park.

“Toilets are working as we have a temporary water system but this is not enough for showers, so they aren’t operational,” she said.

She noted that 4,000 tourists can visit blue flagged Coral Bay a day during the peak summer season and that the current situation is creating a huge loss of revenue for Pegeia and damaging the areas image both at home and with tourists.

“Imagine that tourists can’t even buy water or have a shower,” she said.

Leptos was quick to note that many points being discussed had already been agreed with the current administration, and that problems have arisen due to the previous administration disinterest in resolving them. He declined to comment further, as negotiations are ongoing, he said.

The developer also firmly denied that rumours of the well-known developers creating a hotel on Plot 1, (the car park overlooking Coral Bay), are completely unfounded and untrue.

“We have never, at any point said that we want to build a hotel here, in fact we can’t as we are not permitted to do so by law.”

He said that it was previous owners of Harbour shore estates, which own numerous plots in the area, and which was acquired by Leptos in 2000, that had shown an interest in such a facility.

“We are allowed, by law, to create tourist villas and apartments as well as residential developments on this land and if we haven’t used up all of the square metres permitted for building, we would also create infrastructure there which would be of a benefit to the entire community, as well as visitors too.”

Leptos said that Coral Bay is a gem for Cyprus and that infrastructure options would complement this and could include, parking spaces, a café, a restaurant, locker rooms, a panoramic lift, changing rooms and shower rooms.

“At the moment it is just a dusty space as it has been burnt twice, but not by us. We would clean it up, restore it and add some vegetation. We want to create modern and contemporary facilities to cater for people at the beach,” he said.

Leptos said that queries or objections from councillors could be ironed out once the situation was fully explained.

“If I am given a chance to explain to the council what we propose to do and our position on a number of issues, I am certain any problems could be resolved,” he said.

Editor’s note

Residents at the Harbour Shore Estates development at Coral Bay have been waiting for some 40 years for their Title Deeds.

Although Leptos were not the owners at the time (Leptos Group bought the development in 2000), Coral Bay residents took Harbour Shore to court in 1998, but claimed they lost the case when their lawyer did not turn up for the final hearing.

Golden Visa Program raises €4 billion

Staff Reporter
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2
Golden Visa Program raises €4 billion

Cyprus Golden Visa ProgramTHE GOLDEN Visa Program that gives foreigners residency permit in exchange of investment in real estate and other sectors has fetched €4 billion in revenue to Cyprus in the past one year.

In fact, the revenue earned from the program now accounts for 25% of the Cyprus gross domestic product. The program has outperformed a similar program in Greece by a huge margin. Most of the foreigners buying real estate in Cyprus are Russians, real estate experts said.

The Golden Visa Program is being credited with saving the Cyprus real estate market amid fears that a banking crisis could lead to its collapse.

According to local media reports, compared to Cyprus, the program brought nearly 2.8 billion euros in direct investment to Greece last year, a sum that accounts for just 1.5% of the country’s GDP.

A foreign national has to spend at least €2 million on real estate or €2.5 million on Cypriot government bonds or a company to get a passport.

Some 2,000 passports have been given to foreign nationals from non-European countries, said Cyprus Finance Minister Harris Georgiades. Around half of these are believed to have gone to Russian nationals, Bloomberg reported, citing estimates by PricewaterhouseCoopers. The rising interest of Russians in Cyprus real estate is being attributed to good diplomatic relationship between the two countries. The Cyprus government has also cut red-tape to make the process hassle free for foreigners.

A similar Golden Visa program in Greece, which has been running since mid-2014, offers five-year residence permits to foreign nationals who spend more than €250,000 on real estate purchases.

Greek authorities have issued 1,573 residence permits to foreign investors in Greek real estate. Most of the visas went to Chinese nationals (664), followed by Russians (348), Egyptians (77), Lebanese (73) and Ukrainians (67).

© 2004-2017 Global Property Guide.

Why trapped buyers law unconstitutional

Marina Massoura
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30
Why trapped buyers law unconstitutional

THE LIMASSOL and Paphos District Courts in Cyprus have both ruled that specific articles of the Entrapped Purchaser’s Law were unconstitutional, cancelling therefore, the decision of the Director of the Land Registry to transfer the Title Deeds into the names of the purchasers.

In both cases, the bank filed an appeal regarding the decision of the Director of the Land Registry, to transfer the Title Deeds of the properties into the names of the purchasers.

It needs to be reminded, that the Transfer and Mortgage Law 9/65, was amended in 2015 by introducing Articles 44IH-44KZ and the main purpose was to protect the entrapped purchasers.  The amendment was introduced by the Government, to satisfy Troika’s requirement to transfer title deeds into the names of the purchasers.

Several appeal reasons were introduced by the bank’s lawyers in both cases when submitting their appeals asking from the Court to judge that the decision of the Director of the Land Registry was wrong and illegal. The bank’s lawyers claimed that their client (the bank) suffered unreasonably and irreversibly by these decisions. Further, the bank claimed that the amended Law violated the bank’s constitutional rights as per Articles 23 and 26 of the Constitution.

Article 23 of the Constitution protects the right to freely possess and enjoy property in Cyprus and Article 26 of the constitution provides for the right of contractual freedom.

The Courts found that the decision of the Director of the Land Registry to transfer the property into the names of the purchasers violated the above articles, as these decisions were taken without the consent of the bank.

Further, it was stated that the protection of third parties is not reason enough to justify altering, by law, agreements between parties and as such affecting the rights of the contractual parties.

As such, articles 44IH – 44KZ were deemed unconstitutional.

It remains to be seen, whether the losing side will file an appeal at the Supreme Court or not.

These rulings are in relation to applications in which objections/appeals were filed by the bank. Therefore, it is assumed that for those entrapped purchaser’s applicants, whose applications were not appealed by the banks, this ruling doesn’t affect them at the moment.

Marina Massoura
Lawyer
L.G. Zambartas LLC

Ten years to reduce NPLs

Stelios Orphanides
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5
Ten years to reduce NPLs

THE GOVERNOR of the Central Bank said that the Cypriot banks have made insufficient progress in reducing non-performing loans (NPLs) adding that the supervisor is working on proposals to render the existing legislative framework more effective to speed up the process.

At the current rate of the economy growing at 3 per cent it will take up to ten years to successfully reduce bad loans, Chrystalla Georghadji told reporters on Friday while presenting the Central Bank’s 2016 annual report.

“Despite positive developments, the Cyprus banking sector continues to be threatened by the most important challenge it faces which is not a result of the crisis but is mainly rooted in the bad banking practices of the past. We came to this point because we lacked this type of instruments that banks could use”.

“An important reason for the unsatisfactory reduction of non-performing loans so far is the fact that the new legislative framework has been rendered to a large extent unimplementable or less effective because of the large number of amendments included in the initial bill,” the central banker said.

The Central Bank will submit to the finance ministry its draft proposals addressing provisions of the foreclosure and insolvency laws that prevent their implementation before the ministry forwards them to parliament, she said.

The new foreclosure and insolvency framework came into force two years ago following a dramatic parliamentary process and was part of the Cyprus bailout terms aimed at speeding up procedures to address strategic default. Currently, bad loans account for about half of the banks’ loans portfolio. The governor said that amendments included in the law aimed at protecting borrowers.

“I don’t want to sound that I am defending banks, but a country without healthy banks, cannot have a healthy economy,” Georghadji added.

The governor also said that the European Commission included a reference earlier this week to the foreclosure and insolvency legislation, as well as to the need to modernise the judiciary to speed up justice in its country specific recommendations for Cyprus.

She added that now banks are also free to sell their loans portfolios to other parties without requesting the Central Bank’s approval, provided that the transaction is beneficial to both parties.

With respect to the proposed legislation on loan securitisation which Cyprus had to adopt before the completion of its bailout programme in March 2016, she said that authorities are awaiting the European Commission to issue a new directive before going ahead.

Trapped buyers could lose their homes

Nigel Howarth
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28

Cyprus: Trapped buyers could lose their homesRULINGS by the Limassol District Court & the Paphos District Court that the trapped buyers’ law is unconstitutional will have huge implications for those who have been duped into buying property built on land that developers had previously mortgaged to the bank.

Tens of thousands of people who bought property in Cyprus in good faith will be affected.

The so called trapped buyers law was introduced in 2015 as part of Cyprus’ bailout agreement with its troika of international lenders. Its objective was to transfer properties to their purchasers who, although they had fulfilled their contractual obligations to the vendor, were unable to obtain its Title Deed. Typically this occurred when a developer had mortgaged the land on which he was building or a memo or any other encumbrance has been registered against the property in question and the developer was unable or unwilling to repay this mortgage and other debts.

In Cyprus, like many other countries, a Title Deed is a legal document that confirms the rights of ownership of a property.  Until such time as a Title Deed bears the name of its purchaser, that purchaser does not own the property.

The European Commission’s post-programme surveillance report was highly critical of progress being made on Title Deeds when it wrote:

“The currently dysfunctional Title Deeds issuance and transfer system is deterring potential investors and thus, weighing on the liquidity of the property market. Although some measures were taken to streamline the issuance of Title Deeds for new properties, no new measure was announced to provide for a sustainable system of transfer of Title Deeds.”

What are the possible implications?

In theory the decision by the courts will enable the banks to seize the mortgaged land and all the properties built thereon.

The banks could then sell the land and properties to recover the debt. If the proceeds of the sale exceed the debt, the purchasers affected may receive compensation.

The courts’ ruling is set to have disastrous consequences for Cypriots and foreigners  who were duped into buying property built on mortgaged land by nefarious property developers, lawyers, estate agents and bankers.

Who in their right mind is going to buy a property in Cyprus without its all-important Title Deed? Probably those seeking Cypriot passports and citizenship falling victims to the cheats and liars that still pervade the island’s property industry and legal ‘profession’.

Further reading

Ruling by the Limassol District Court (Greek)

Ruling by the Paphos District Court (Greek)

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