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 the island, especially when purchasing off-plan or properties on new developments.
A LEGAL PROMISE
Buying a property in a new development often means that title deeds will be issued after a legal process is followed. This process can typically take a few years to complete, which means that these purchases are based on a legal promise instead. On several occasions, title deeds are issued, but this is dependent on several factors and obligations that have to be fulfilled by all stakeholders.
NO GUARANTEES
Unfortunately, several buyers of new-build property often find themselves unable to obtain title deeds. Many have found to their dismay that this occurs mainly because of outstanding mortgages on the property. Creditors often block the transfer of deeds until all monies owed, usually by the developer or a previous owner, are paid. Defined as trapped buyers, these property owners are then subjected to a series of legal battles if they try to obtain title deeds. There is often no guarantee of an outcome, and most find themselves with no title deeds.
SEEKING A LEGAL SOLUTION
In excess of 10,000 such cases are currently pending. All of the Cyprus government bodies concerned are actively seeking a legal solution for trapped property owners, but they are facing an uphill legal struggle. They have constantly tried to introduce a series of new amendments to relevant legislation, but this has been thwarted constantly 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 against this law was immediately launched. A recent appeals court decision has found that this new law was, in part, illegal. It ruled that the land registry has no right to transfer the title deeds of mortgaged properties, as this would cause lenders to incur unrecoverable losses.
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.
