Cyprus Mail
Cyprus Property

MPs pass bill for ‘trapped’ property owners

By Elias Hazou

 

PARLIAMENT on Thursday voted through a bill paving the way for thousands of home buyers to be issued title deeds by releasing them from property sellers’ obligations to banks.

The item, as well as the relevant ordinances, passed by unanimous vote.

The bill is designed to sort out the mess created by the failure to issue title deeds to people who paid for the property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.

Since developers’ land and buildings are counted as assets that need to be offset against their debt to banks, this gives lenders a claim on people’s properties that had been mortgaged by developers.

The bill grants the head of the land registry department the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions.

It covers transactions up until December 31, 2014.

The House also passed an amendment, tabled by ruling DISY. which provides that a property will not be transferred to the buyer’s name if the latter owes immovable property tax (IPT) to the government or the municipality, or owes sewerage fees.

And an amendment by DIKO affords homebuyers the opportunity to pay transfer fees in 12 monthly instalments by the end of 2016, with a 10 per cent discount for early settlement.

Home buyers who fail to pay the transfer fees within the specified deadline will incur a penalty of 50 per cent. Previously, MPs had considered a 100 per cent penalty.

AKEL, EDEK and the Greens jointly tabled an amendment which aimed to block foreclosures on properties until the end of 2017 where buyers had paid up to 80 per cent of the sale price but are unable to settle the balance due to financial difficulties, such as having lost their job amid the economic crisis.

The amendment failed to garner support beyond the three parties and was defeated. MPs argued that the proposal, if adopted, might have given people an excuse not to pay contractors, who are facing their own cash-flow problems.

Nevertheless, AKEL voted for the bill as it affords some protection from foreclosures.

“We reached the conclusion that this government, too, can defend the rights of ordinary people and not only the rights of businessmen and developers,” AKEL MP Yiannos Lamaris said.

The core of the government legislation addressed the cases of some 30,000 buyers for whose property title deeds have been issued but couldn’t be transferred to the buyer despite them fully honouring the repayment terms of the sale agreement.

After discussions in parliament, the bill was broadened to also cover an additional 48,000 – also honouring the terms of sale – that had no title deeds issued. Foreclosure proceedings on these cases will be suspended, allowing sufficient time to have the deeds issued.

DISY leader Averof Neophytou observed that the state is finally doing what it should have decades ago.

“It took the troika to back us into a corner,” he said, referring to Cyprus’ international lenders.

Resolving the title deeds muddle is a ‘prior action’ set by the international creditors for releasing the next bailout tranche.

DIKO chairman Nicholas Papadopoulos said he anticipated the new law would likely be contested in the courts.

“I don’t think the banks will keep their word… they will raise objections. But let them know that we won’t leave homebuyers out on a limb, we shall remain vigilant.”

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