AFTER more than a decade of sweeping the problem under the carpet, at last, someone has decided that the problem of unissued title deeds needs to be addressed. AKEL drafted a bill which would exempt properties that had been paid in full, while the title deed remained with the bank as collateral for a developer’s loans, from being repossessed by the banks and the bill was discussed at House committee level yesterday.
It was about time the matter was addressed. There are tens of thousands of such cases and although the authorities have been aware of the problem for years they have steered clear of it because there was no obvious solution. It was the familiar approach, based on wishful thinking – the problem would gradually be solved as the developers repaid their loans to the banks – that did not factor in the possibility of a housing market collapse that would lead many developers to bankruptcy. Although the worst-case scenario became reality a couple of years ago, the authorities thought the best policy was to ignore it.
Now, thousands of people, who had paid in full for their properties, are in danger of losing them because developers cannot repay their loans and the title deeds remain the ownership of the banks which, at some point would try to recover some of the money by selling these properties. There could be no greater injustice than kicking people out of the flats or houses they had paid for in full, because of the grossly unethical practices followed by the banks. They should never have accepted as security, properties they knew had been sold, but because they had money to lend they saw no problem with this unorthodox practice.
The banks should now take the hit, because they should never have given loans to developers who were using properties they had sold as collateral. Even though this practice was within the law, the fact is that the banks took a big risk and lost by assuming that this high-risk system of lending could go on indefinitely. Why should honest, law-abiding home-owners who had honoured their purchase agreements pay for the sharp practices followed by developers and the banks? How lawful and morally just would it be to kick someone out of a house he had fully paid for?
At yesterday’s committee meeting, a Finance ministry official said that a team of technocrats from the ministry, the Central Bank and the Land Registry would assess the problem and cost these loans. She also cautioned that AKEL’s bill could be exploited by people who might never secure a title deed so as to avoid repossession of a house they bought, if this were warranted. The danger of an individual abusing the system is a big concern for ministry officials, who never showed similar concern about protecting individuals when developers and banks were abusing the system on a grand scale.