WHAT IS A 'TRAPPED BUYER?'
A ‘Trapped buyer’ is a term that often refers to property owners in Cyprus who have bought real estate without title deeds. Although this may seem somewhat peculiar, this practice is common across Cyprus, especially when purchasing off-plan or properties on new developments.
A LEGAL PROMISE
Buying a property in a new development typically means that title deeds are only issued after a formal legal process is completed. This means that purchases of this nature are based on a legal promise instead. As a result, this process is dependent on several other factors and can take several years to complete, and is not guaranteed! In some cases, this has left some property buyers unable to obtain title deeds.
NO GUARANTEES
Whilst in most cases, title deeds are eventually issued, the process is still dependent on several factors. There are several obligations that have to be fulfilled by all stakeholders concerned before any such transfer. If these obligations are not met, then title deeds are simply not issued. This causes delays and, in some cases, a constant legal battle. Many have found to their dismay that this occurs mainly because of outstanding debts, owed by the developer or mortgages or finance agreements that are still attached to their properties. This means that creditors often block the transfer of deeds until all monies owed, usually by the developer or a previous owner, are paid.
SEEKING A LEGAL SOLUTION
Defined as trapped buyers, these property owners are then often subjected to a series of legal battles in their attempts to obtain title deeds. Although most remain optimistic, they still face an uphill legal struggle with no guarantee of an outcome. With in excess of 10,000 such cases currently pending, the government are actively seeking a legal solution by introducing a series of new amendments to relevant legislation. However, this has been constantly thwarted by creditors.
AN APPEALS COURT DECISION
A new law that was passed in 2015 was enacted to enable the land registry to re-examine applications for title deeds. This was halted, however, when an appeal was launched by creditors. The resulting appeal found that the new law was, in part, invalid. It was also stipulated that any such laws would cause lenders to incur unrecoverable losses. The land registry, as a result, still has no right to transfer any title deeds of properties that still have debt attached to them.
NEW SOLUTIONS
The Interior Ministry and the Land Registry, in response, have since made renewed efforts to find a solution. They are both trying to create an environment that will find the 2015 law to be constitutionally valid. This, in effect, would reverse the recent appeals court decision. Both bodies argue that, provided there is documented evidence that the buyer, in all cases, has fulfilled all of their financial obligations, then they should be able to proceed to secure a transfer of title deeds.
A COMPLEX LEGAL ISSUE
Whilst the legal issue remains somewhat complex, the Interior Ministry and the land Registry remain confident that a solution can be reached. In light of this, the Interior Ministry has put forth several proposals to help resolve the issue. All current applications remain pending until this can be clarified.
TRAPPED PROPERTY BUYERS
There are currently over 10,000 trapped property owners across the island who are unable to obtain title deeds for their respective purchases. As this problem remains relevant and with no viable solution in sight, their continued frustration and disillusionment are still apparent, even though the government has issued further assurances.
The fact remains that these property buyers, who purchased their properties without title deeds and who have fully repaid their home loans, are still being affected by developers with unpaid debts. Some of them are now facing the prospect of paying off the outstanding debts that are owed by their respective developers to obtain title deeds. Others are also claiming that they are being forced to act or face foreclosure because of these debts. In equal measure, most of these trapped property buyers are blaming the banks for helping to create this situation. They maintain that if banks had enforced the proper use of funds in the first instance, then this situation might have been avoided.
As a result, all concerned are constantly being urged to take immediate action to resolve the issue. The majority of political parties, aware of how urgent the situation has become, are also demanding a change. They are asking for the government, which fully acknowledges the urgency to protect trapped buyers at risk of losing their homes, to use new legislative measures to resolve the issue from a legal point of view. This would then obligate banks and credit acquisition firms to find just solutions that would assist buyers.
In response, the government has recently stated that constant efforts are being made to find a legislative solution to the problem. This comes after a recent court ruling that originally declared some provisions in favour of trapped property buyers unconstitutional reversing several facets of the original ruling. This has forced the government to re-examine the bill and they are now working on a new bill that will be presented to parliament in the near future.
