Earlier today Stockwatch published an article with revised details of the new legislative proposal aimed at resolving the long-standing issue of ‘trapped buyers’ in Cyprus.

Update – proposed law available online

The proposed law may be viewed and downloaded in the original Greek. I have used AI to translate the proposed law and the translated version may be viewed and downloaded in English.

A couple of points to note:

• The is a series of amendments to the Immovable Property (Transfer and Mortgage) Law (CAP.224) and should be read in conjunction with that law
• The English AI translation must not be considered as authoritative

I have translated the Stockwatch article, which was published in Greek, to English and presented it below in blue.

This is followed with a summary of what I believe are the key aspects of the trapped buyers’ proposal. (Note that the proposal does not include the potential 15,000 buyers trapped by serious planning violations.)

A draft bill prepared by the Parliamentary Legal Affairs Committee to resolve the issue faced by thousands of “trapped buyers” is now ready. These are individuals who, despite having paid for their properties, have been unable to obtain title deeds due to mortgages still held by the sellers.

This problem arose after the Court of Appeal ruled that the previous legislation protecting these trapped buyers was unconstitutional.

The attached draft bill will be discussed today by members of the Legal Affairs Committee, with the aim of finalising the text so it can be submitted to the House of Representatives this coming Thursday.

Parliament must act quickly, as the current suspension of property repossessions for trapped buyers – granted by the Association of Banks and the Association of Credit Acquiring and Servicing Companies – expires at the end of July.

It is important to note that the proposed law, based on the bill prepared by the ad hoc working group created for this purpose, will not cover all affected buyers. Reports suggest that the proposed regulation will benefit fewer than half of those affected.

In a previous update to the Legal Affairs Committee, Interior Minister Constantinos Ioannou stated that a total of 9,497 buyers are unable to secure title deeds due to the now – invalidated legislation.

He noted that a solution has been found for around 2,500 buyers whose properties are either unencumbered or were encumbered after the filing of the sales contract.

Approximately 5,400 cases remain unresolved until it is determined whether separate title deeds can be issued for the units.

For the remaining 4,080 cases, where encumbrances were added before the contract was filed, consent will be required from the party or institution that registered the encumbrance.

What the bill proposes

The purpose of the bill is to amend the Immovable Property (Transfer and Mortgage) Law to address the provisions related to the protection of “trapped buyers” that were deemed unconstitutional by the Court of Appeal.

The proposed changes are necessary to resolve the serious issue of buyers who have fulfilled their contractual obligations but are unable to obtain ownership due to existing mortgages or other charges against the sellers.

Specifically, the bill seeks to protect a subset of these “trapped buyers” following the court’s decision on 20 June 2024. Article 23 of the Constitution allows property rights to be regulated by law, provided it aligns with the principle of proportionality and protects the rights of good-faith parties. The state acknowledges the gravity of the problem and the urgent need for a solution.

At the same time, there remains a need to balance the constitutional rights of all involved parties in a property transaction – namely, the good-faith buyer, the seller, and the mortgage lender – in a way that does not nullify the core rights of any party.

The bill covers properties for which contracts were signed and submitted to the relevant District Land Registry by 31 December 2014, or which were agreed upon by that date and filed with the District Court by 31 December 2024.

If the property is subject to prior registered encumbrances or restrictions, written consent must be obtained from those who benefit from those charges for them to be waived or cancelled.

Court orders for title deeds

Following a proposal by MP Panikos Leonidou of DIKO, the bill includes a provision allowing the courts to grant the required consent by order if the party benefiting from a charge or restriction unjustifiably refuses to give it, provided the purchase price has been fully paid.

It is noted that this amendment was not originally proposed by the ministry but is deemed necessary due to the wider legislative changes being introduced.

Government concerns

As currently written, the amended clause allows for the suspension of other legal provisions until the review of applications is completed—subject to whether a title deed has been issued.

For applications without title deeds, the current clause requires that issuing one must be feasible. Under the new rules, a title deed must exist in order to submit a new application.

For existing applications, the suspension remains in place until review is complete. If a title has not been issued, the application must be rejected within eight months unless supporting documents are provided, or within two years and eight months if a title deed is still not issued by then.

Moreover, if the Director finds that issuing a title deed is not feasible for any other reason by the end of the time limit, the application can be rejected.

Key aspects of the trapped buyers’ proposal

What the trapped buyers’ draft bill proposes

The bill seeks to amend the Immovable Property (Transfer and Mortgage) Law, aiming to restore protection for buyers – this time within constitutional bounds.

Key elements include

• Eligibility Cut-off Dates: The bill covers contracts signed and filed with Land Registry Offices by 31 December 2014, or filed with District Courts by 31 December 2024.
• Written Consent Clause: If the property is burdened with a pre-existing mortgage or restriction, the buyer must obtain written consent from the lender or entity involved.
• Court Intervention Option: If that consent is unfairly or unreasonably withheld – even after the buyer has paid in full – a court can issue an order to allow the transfer.

Who’s covered by the trapped buyers bill – and who isn’t

Despite the bill’s significance, it won’t help everyone. Officials estimate that fewer than half of the 9,497 trapped buyers will benefit under the current proposal. The proposal does not address the potential 15,000 buyers who are trapped by serious planning violations.

• Around 2,500 cases have already been resolved or are eligible for resolution under existing frameworks. So why are these buyers still trapped?
• Another 5,400 buyers remain in limbo, awaiting clarity on whether title deeds can be issued for their specific units – plus the 15,000 buyers trapped by serious planning violations.
• In 4,080 more complex cases, where mortgages were applied before sale contracts were filed, buyer consent from lenders will be required – or a court ruling may be needed.

Government concerns and pending applications

The proposal has met with some reservations from government bodies, especially concerning how it affects other existing legislation.

Under the new rules

• For new applications, the existence of a title deed is a must.
• For pending applications, if supporting documents aren’t submitted within 8 months, or if no title is issued within 32 months, the application will be rejected.

The bill also allows the Land Registry Director to reject applications if issuing a title deed is impossible for other legal reasons.