WHAT IS A 'TRAPPED PROPERTY OWNER?'
A ‘Trapped Property Owner’ is a term often used to refer to property owners in Cyprus who have purchased real estate without title deeds. Although this may seem peculiar, this practice is common across Cyprus and is especially prevalent when purchasing properties off-plan or in new developments.
A LEGAL PROMISE
Buying a property in a new development typically means that title deeds will only become available after a formal legal process is completed. This means that purchases of this nature are based on a legal promise instead. Although this process is perfectly legal, the actual concept in practice is not as straightforward. This legal process, of obtaining title deeds in this way, is entirely dependent on several other factors. The process, as a result, can take several years to complete, and in some cases, has left otherwise honest property buyers unable to obtain their title deeds.
NO GUARANTEES
The reality of the situation is that several legal and financial obligations need to be fulfilled by all stakeholders concerned before any transfer of title deeds can take place. If these obligations are not met, then title deeds are simply not issued. This, in the past, has often caused delays and, in some cases, constant legal battles. Many owners have found, to their dismay, that they have been unable to obtain title deeds because of outstanding debts owed by a developer. These have come in the form of mortgages or finance agreements that are often attached to their properties, causing a conflict with creditors, who often block the transfer of title deeds until all monies owed are paid.
SEEKING A LEGAL SOLUTION
Although most trapped buyers remain optimistic, they still face an uphill legal struggle with no guarantee of any outcome. Approximately 10,000 such cases are currently pending, and the government, because of this, is actively seeking an overall legal solution to the matter. They are attempting to achieve this by introducing a series of new amendments to relevant legislation. Previous attempts to do this, however, have been successfully thwarted by creditors.
AN APPEALS COURT DECISION
A new law, passed in 2015, was enacted to enable the land registry to re-examine all applications for title deeds. This, however, was halted when an appeal was launched by several creditors. The appeal found that the new law was, in part, invalid. This was based on the fact that it would cause lenders to incur unrecoverable losses. As a result, the land registry currently 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 have since made renewed efforts to ratify the 2015 law, allowing it to become constitutionally valid. This, in effect, would reverse the recent appeals court decision. Their argument states 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 optimistic 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. Some of these buyers, having fully repaid their home loans, are still unable to obtain title deeds. This is mainly because their properties are still being affected by developers with unpaid debts. Although the government has issued further assurances, there is still no viable solution in sight. As this problem remains relevant, their continued frustration and disillusionment are still apparent.
In light of this, some trapped property owners are facing the prospect of paying off the outstanding debts that are owed by their respective developers. They are 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.
The majority of political parties, aware of how urgent the situation has become, are also demanding a change in law. Several are asking the government, which fully acknowledges the urgency, to protect trapped buyers at risk of losing their homes. They also believe that new legislative measures are needed to resolve this issue. This would then obligate banks and credit acquisition firms to find just solutions that would assist these buyers.
GOVERNMENT TO ACT!
SEVERAL NEW LEGAL CHALLENGES
The government is actively working on solving the issue of ‘trapped buyers’ in Cyprus. This comes in the aftermath of a recent court ruling that found part of the 2015 law illegal. The land registry, as a result, then halted its review of all applications, forcing trapped buyers to once again launch several new legal challenges.
A NEW LAW TO PROTECT HONEST BUYERS
With a renewed willingness to find a solution to the ongoing problem, the interior ministry is currently reviewing the situation. The ministry is in the process of creating a new law to protect honest buyers with good intentions and to create a law that is fair to everyone. They also want to clearly define a process of transfer of title deeds to honest buyers to avoid all legal problems later.
