Cyprus Mail
Cyprus

BOC contests court ruling banning application of new foreclosure law

Bank of Cyprus has filed an appeal against the ruling of the Larnaca district court, which banned it from applying the modernised foreclosure law in disposing a collateral for which a court ruling existed based on the previous legislation.

The Cyprus Business Mail understands that the appeal was filed on Thursday. Bank of Cyprus declined to comment.

In its September 12 ruling concerning a 2007 mortgage deal, the court ruled that Bank of Cyprus had to proceed to the foreclosure of the property based on a 2006 court order and had therefore no right to send a “type I” note to the owner. The ruling caused perplexity in Cyprus’s banking system.

The Association of Cyprus Banks said in a statement “it has reservations about the ruling” concerning its legal drafting and therefore intended to study the underlying legislation in-depth.

The modernisation of the foreclosure law was part of Cyprus’s bailout terms, aiming at helping speed up foreclosure procedures, which under the old law took ten years or longer, thus helping reduce the non-performing loan portfolio of Cypriot banks.

In an interview to Inbusiness.com, finance minister Harris Georgiades said that he was not in favour of changing the law as it would cause uncertainty. Still, government agencies monitor the situation waiting for banks to evaluate the ruling to determine which old cases are affected, he said.

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