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Cyprus

Parliament urges foreclosure exemption for buyers without title deeds

By George Psyllides

Parliament urged the government on Wednesday to find a solution for people who bought houses from insolvent developers without acquiring title deeds and who risk losing their properties even though they may have already paid for them in full.

The issue was raised during discussion of a bill tabled by main opposition AKEL to ban foreclosures in such cases.

“There is an emergency situation in the real estate market and people who meet their obligations are at risk,” AKEL MP Giorgos Loukaides said.

Many buyers are now in trouble as the crisis continues and property developers fold.

The developers’ land and buildings are counted as assets that need to be offset against their debt to banks, which gives lenders a claim on people’s properties that had been mortgaged by the developers even if the purchasers had paid the developer for them in full.

The banks readily lent to property developers, especially between 2004 and 2008, fuelling an unsustainable frenzy of activity which roughly tripled prices.

The outdated legal framework enabled property developers to sell on property that was already mortgaged.

Land registry official Charalambos Charalambous told MPs that issuing title deeds would not solve the problem since the developer’s mortgage takes precedent over that of a borrower.

A finance ministry official said a team of technocrats from the ministry, the Central Bank, and the land registry would  assess the problem and the cost of these loans by the end of May.

She said the ministry was trying to find solutions but cautioned that AKEL’s bill provided an incentive to those who bought a house through a sales contract to never seek to acquire a title deed in an attempt to avoid foreclosure even where it might be warranted.

 

 

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