By George Psyllides
THE new legal framework on foreclosures introduces a semi-private procedure which limits the role of the Land Registry, it has emerged.
The auctions will be carried out by the creditors, though going through the Land Registry remains an option, according to the Bank Association’s annual report, which contains the main provisions of the bill.
Changing the current regime to expedite foreclosures was among the terms agreed with the troika of international lenders.
The long delays were mainly due to the procedures followed by the Land Registry, the only body authorised to carry out forced sales of mortgaged property in Cyprus.
According to the current law, the Land Registry inspects the property, sets the reserve price, resorts to court for directions, sends notification letters to the parties affected, publishes announcements in the daily press for the date of the auction, performs the auction, pays the taxes and distributes the money obtained in the auction to those entitled to it.
The procedure is delayed further when, in an attempt to postpone the sale of their property, mortgagors habitually obtain court orders for the cancellation of the auction questioning the reserve price set by the Land Registry.
On average, forced sales in Cyprus could take up to ten years and in some cases 15, the Bank Association said.
The bill stipulates that the new procedure will also apply to old cases. It will kick in when the debtor defaults for at least a month.
The lender is obliged to notify the borrower in writing of their intention to proceed with a forced sale, but can also publish the notification in two main newspapers if it is impossible to serve the notice.
The borrower is given a month’s grace to repay the loan.
The value of the property is set after taking estimates from two independent valuers and if the sale is unsuccessful, the lender has the right to make three more attempts in separate auctions where the reserve price is reduced by 10 per cent each time.
The proceeds from the sale are allocated by the Land Registry.
The report said the real challenge for the government was to adopt mechanisms to diminish potential shocks in the real estate and credit markets, and social welfare.
“This need becomes evidence taking into account that between 2000 and 2008 not more than 200 sales were successfully conducted in each year with the number subsequently dropping further, while there are currently over 3,000 pending cases before the Land Registry.”