A BILL addressing the issue of ‘trapped’ home buyers without title deeds looks set to breeze through the House plenum this Thursday, following a final-hour consensus struck between the government and political parties.

The core of the government legislation addressed the cases of some 30,000 buyers for whose property title deeds have been issued but couldn’t be transferred to the buyer despite them fully honouring the repayment terms of the sale agreement.

After discussions in parliament, the bill was broadened to also cover an additional 48,000 – also honouring the terms of sale – that had no title deeds issued. Foreclosure proceedings on these cases will be suspended, allowing sufficient time to have the deeds issued.

“It has been demonstrated that the government’s policy was not about fast-tracking foreclosures en masse, which some used as scaremongering, but rather… about solving a long-standing problem for property buyers who, while being consistent with their obligations, saw their property remain in limbo and at risk because of the obligations of other parties or due to weaknesses in the system,” Prodromos Prodromou of the ruling DISY party commented.

He was speaking shortly after Tuesday’s joint session of the House interior and finance committees discussing the bill.

Main opposition AKEL said it will vote for the item, despite the fact it does not cover those who paid up to 80 per cent of the home’s price but were not consistent with the remainder of the balance. These cases are not protected from foreclosure.

The party intends to table a legislative proposal extending by two more years the suspension of foreclosure proceedings for this category. The foreclosure exemption for ‘trapped’ buyers currently expires on September 5.

DIKO meanwhile plans to table an amendment next week whereby ‘released’ home buyers would be allowed to settle outstanding transfer fees in 12 monthly, interest-free equal payments, after the property has been transferred to them.

The government bill is meant to sort out the mess created by the failure to issue title deeds to people who paid for the 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 gives lenders a claim on people’s properties that had been mortgaged by developers.

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

It covers transactions up until December 31, 2014.

The bill provides for the balance on a property sale price to be paid into a special temporary account, allowing the director of the land registry department to initiate the transfer procedure.

The elimination or transfer of mortgages and or other encumbrances will take place within 45 days of a notice sent out to affected parties, who have the right to appeal.

Mortgagors (typically property sellers) may request that the encumbrance be transferred onto other properties they own. If they do not own other property, they may request that the encumbrance be transferred onto the property of persons who guaranteed their loans.

‘Released’ properties will be transferred to the name of the buyer, who will bear all transfer fees. The buyer is subject to a 100 per cent penalty on the fees if he or she does not pay them within the specified deadline.

The director of the land registry department will strike any encumbrances on a property with a title deed before it is transferred.

Resolving the title deeds muddle is a ‘prior action’ set by Cyprus’ international creditors for releasing the next bailout tranche.

SINCE my comments concerning the draft bill designed to protect ‘trapped buyers’ from losing their homes despite having paid for them were published in the Sunday Mail, it appears that Interior Minister Socrates Hasikos has had a change of heart.

The draft bill, which enabled Title Deeds to be issued to property buyers who purchased property from nefarious  developers who had built and sold homes on land that they had previously mortgaged to the bank and who are now unable or unwilling to repay the debt, contained a flaw; it only applied to around 30,000 properties that had been issued with their Title Deed.

This left the buyers of a further 48,000 homes, which have not had their Title Deeds issued, at risk of foreclosure.

It appears that this ‘hole’ in the bill has been resolved. At yesterday’s joint meeting of the House Finance and Interior committees, Socrates Hasikos announced that the buyers of these 48,000 properties would also be protected from foreclosure.

The draft bill will be discussed by a special plenary session of parliament on Thursday (3^rd September) – and there may be some changes to the draft discussed and agreed before a majority of MPs vote it into law – and then President Anastasiades has to give his assent.

Demetra Valianti Plati from the Association of Cyprus Banks has complained that the bill will leave the banks exposed, but Mr Hasikos has invited the media to speak with the presidents of the Cyprus Banks to see if they are concerned.

Although it may be possible for a bank to submit an objection to the issue of a Title Deed to a ‘trapped’ buyer, a representative from the Central Bank reported that if the banks knew about the sale of the property or gave a loan guarantee, their objection would be rejected.

However, there are a small number of cases (between 5% and 10%) where the bank will be entitled to object as it did not know about the sale. These cases would include cash buyers who did not require a loan from the bank. But even if the banks raise objections in these cases, there is no guarantee that they will be successful.

(On the last point, the banks must have known when monies from the sale of property were deposited in the developer’s bank account?)