21.10.2022
A bill was submitted to the plenary session of Parliament, which should prevent property buyers in Cyprus from falling into the trap.
For readers who have not come across the term “trapped buyers”, this refers to those who buy property but are unable to acquire title (title) to the property because its current owner (usually the developer) has previously mortgaged the property and failed to pay off the debt.
Typically, buyers were trapped because the owner did not declare that the property was in collateral, or the lawyer acting on behalf of the buyer failed to protect the interests of his client.
This new bill aims to prevent the transfer of contracts for the sale of property to the land registry in cases where the property is encumbered with a mortgage or the current owner of the property is prohibited from selling it by court order. However, contracts for the sale of mortgaged property may be deposited provided they are accompanied by a written statement from each mortgagor and seller confirming that the buyer has been notified in writing that the property has been mortgaged.
Specifically, the bill amends existing legislation to allow for the process of buying and transferring real estate and to address “the current serious problem with property buyers who, although they have fully fulfilled their contractual obligations towards the seller, cannot transfer the property to their name.” due to encumbrances preventing its transfer.”
It is expected that amendments to the bill will be voted by Parliament before the end of this year.
Stuck Buyers
In 2015, the Trapped Buyers Act (Real Estate Transfer and Mortgage (Amendment) Act (No. 10 )) was passed , which allowed so-called “trapped buyers” to acquire title to real estate provided that they fulfilled their contractual obligations to was introduced by the Government to satisfy Troika’s demand for the transfer of title deeds to the buyers’ names.
While the 2015 law was partially successful, the district courts in Limassol and Paphos ruled that it was unconstitutional after being successfully challenged by lawyers representing banks. Subsequently, this decision was appealed, and we are still waiting for the decision of the Supreme Court.
A step in the right direction
While this latest development may help prevent buyers from being trapped in the future, there remain a number of significant issues that result in buyers being trapped through no fault of their own:
Developers are unable to complete their developments, leaving buyers trapped until they pay third parties to complete the work. In some cases, the developers leave the project unfinished and move on to something else, and in other cases, the company fails and goes into administration / admissions.
Developers violate planning regulations or fail to comply with plans and permits approved for the construction of their development; some have been known to build illegally without permits. Again, the buyers are trapped until they pay third parties to fix violations, etc.
Although Cyprus has made some progress in protecting those who buy property on the island, there are still many real estate-related issues to be resolved by lawmakers.
