The state will appeal two district court decisions saying a law designed to help so-called trapped property buyers clashed with the constitution, MPs heard on Wednesday.
In the meantime, enforcement of the said legislation will continue until further notice.
The 2015 law aimed to sort out the mess created by the failure to issue title deeds to people who paid for their property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.
Following the recent decisions, brought about after banks objected to the law, the land registry had suspended procedures, as authorities contemplated their next move.
The Legal Service instructed the departments involved to continue implementing the law while appeals will be filed at the Supreme Court, which will have the final say on the matter.
House legal affairs committee chairman Giorgos Georgiou said the legislation had loopholes and weaknesses, which must be rectified as soon as possible, even in the middle of summer.
The ruling Disy MP said thousands of trapped buyers risked remaining without protection, voicing hope that a new law would be passed in September.
Main opposition Akel MP Aristos Damianou agreed that any kinks must be ironed out as fast as possible since the matter concerned over 20,000 individuals and companies, many of them foreign, who filed cases against Cyprus in international courts.
Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gave lenders a claim on people’s properties that had been mortgaged by developers.
The 2015 law grants the head of the land registry the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions.
In one of the cases, filed by Alpha Bank against a Paphos developer and a British couple, the court said the law violated Article 26 of the constitution, which affords individuals the right to enter freely into any contract.
It also said lawmakers have no right to intervene in contracts that preceded the law.