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. This process is also not guaranteed! In some cases, property buyers have been left out in the cold, unable to obtain title deeds.
NO GUARANTEES
Whilst in most cases, title deeds are eventually issued, the process is still dependent on several factors. Several obligations 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 mortgages on the property. 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, property owners are 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, all of the Cyprus government bodies concerned are also actively seeking a legal solution. They are attempting to introduce 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 immediately launched. Another recent appeal has 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 are still mortgaged.
NEW SOLUTIONS
The Interior Ministry and the Land Registry have since made efforts to find a new solution. They are both trying to create a landscape that finds the 2015 law to be constitutionally valid. This, in effect, would reverse the recent appeals court decision. They both maintain that, provided there is documented evidence that the buyer in all cases has fulfilled all of their financial obligations, then they should initially 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 remains 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.
