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Cyprus

Cabinet approves title deeds bill (updated)

By George Psyllides

The cabinet has approved a bill addressing the problem of thousands of home buyers trapped without title deeds, Interior Minister Socratis Hasikos said on Wednesday.

The bill covers thousands of people who paid for their home but could not get a title deed either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.

“All these people are secured with this bill and will be able to ensure ownership of the property with a title deed,” the minister said. From then on they can sell, transfer, or mortgage the property.

The bill authorises the head of the land registry department to transfer and cancel mortgages, among others, depending on the case and under certain conditions.

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 developers.

Thousands have been left without deeds as a result.

Hasikos said the bill also covered those who paid a large chunk of the price, 80 per cent or 90 per cent. If they have the rest of the money they can deposit it in a special account through the land registry and secure their title, he said.

The difference with a bill passed by parliament and rejected by the president recently, was that parliament simply ensured use of the property by the ‘trapped’ owner while the government legislation ensures ownership, Hasikos said.

Under the terms of its bailout, Cyprus has set up a task force “on registered, but untitled, land sales contracts” to study the matter.

It is understood, based on previous comments by government sources, that the banks could be taking a hit.

Last month, Hasikos said “banks must finally take responsibility for their actions. When they were giving out loans to developers or contractors to build an apartment bloc, they ought to have checked that this money was being used for that specific project and not for something else.”

“The buyers,” he added, “are not at all responsible and they must be protected.”

A government source asked at the time about the possible impact on banks said the Central Bank did not have a problem with it.

An official statement outlined the main provisions of the bill.

“With the proposed changes, for the purpose of issuing ownership titles to the benefit of the entrapped buyer, authority is granted to the director of the land registry department to exempt, eliminate, transfer, cancel mortgages and or other encumbrances, depending on the case and under conditions,” a written statement from the ministry said.

Specifically, the sale price must have been paid in full by the buyer. In case of an outstanding amount, the buyer can deposit it in a special temporary account managed by the land registry director.

The director will have the power to transfer mortgages to other property belonging to the seller. If no such property is available, the director can transfer the encumbrances on individuals who guaranteed the seller’s obligations and, at the time the agreement was signed, had acted as board members, or owned over 10 per cent of the seller’s share capital.

The bill concerns the seller’s obligations to banks and the state.

To benefit from these provisions a sales contract for the property or part thereof, must have been submitted to the land registry department by December 31, 2014, the statement said.

The bill applies to all immovable property, plots and buildings.

In March, parliament passed a bill indefinitely banning repossession of houses whose owners have no title deeds, even though they may have paid for them in full, because developers had already taken out loans on those properties which they cannot repay.

MPs basically changed a clause in the main foreclosures law, which had exempted this category of properties from repossession until April 30.

According to the provision, such properties will be exempted provided the buyers paid at least 80 per cent of the sale price or have fully complied with their contractual obligations towards the seller.

But the president refused to sign the bill into law and sent it back to parliament, arguing that it was unconstitutional and created ‘a general and permanent shield’, not for vulnerable groups, but a number of sellers and land developers.

Parliament accepted the president’s argument and changed ‘indefinite’ to ‘July 10.’

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