“The buyer of a property through auction is considered bona fide and safe”
The process of selling a property through auction as well as its transfer, according to the provisions of the law, is completely legal and valid and the purchaser acquires a good title and the property rights. As a bona fide purchaser, he can exercise his rights, if the previous owner still resides or possesses the property, to demand they cease trespassing and vacate the premises. If the previous owner does not comply, the purchaser, who acquired it through auction in good faith and for valuable consideration, is entitled to claim the delivery of its possession and can file an application for a summary judgment of the court.
Any proceedings previously pursued against the mortgage creditor and dismissed, constitute an additional obstacle which creates a presumption of regularity for the legitimacy of the auction process. The property right of the previous owner ceases to exist with the sale of the property at auction and the registration of the purchaser as the new owner.
In one case of a property sold at auction, the buyer had a problem with the previous owner, who continued to live in the property which was mortgaged in favour of a banking institution. The banking institution on the basis of the mortgage had activated the forced sale procedure under Part VIA of Law 9/1965. The previous owner unsuccessfully sought stay of the proceedings through an application for an interim order, as well as the cancellation of the auction procedure and the suspension of the transfer of the property to the new purchaser. The new owner filed a lawsuit and an application for summary judgment for the delivery of the possession of the property and the District Court of Nicosia in a judgment dated Ferbuary 4 issued orders in his favour.
In particular, the purchaser supported the regularity and legality of the auction process, a fact that was confirmed by previous court decisions in the context of proceedings filed by the previous owner. He also argued that the previous owner had been barred from pursuing any defence proceedings for the legality of the auction and that the filing of a memorandum of appearance was intended to delay the proceedings and that he did not have any bona fide defence. The previous owner claimed that the auction was conducted in violation of explicit provisions of the law and that there had been only one bidder, while he was not allowed to submit a bid and that no legal or statutory valuation was made, as well as that the notice of the auction was not notified or published properly.
Examining the application in the light of the legal principles that govern the application for summary judgment, the court ruled that the facts of the case were such that they allowed it to exercise its power and issue a summary judgment on the remedies claimed by the purchaser as the owner of the property. In the court’s assessment, it was clear that the previous owner did not have any defence. The validity of the auction process and the transfer of the disputed property in the name of the purchaser was ascertained by the court in the context of applications/appeals of the previous owner. The fact that he filed an appeal does not constitute an obstacle to the success of the purchaser’s claims and cannot therefore outweigh the outcome of the auction.
The court indicated that the purchaser correctly stated that under the circumstances he is a bona fide purchaser, as he acquired ownership of the property through a lawfully conducted auction as established by the court. The facts relied on by the previous owner could not be valid grounds of defence regarding the purchaser’s claims for the issuance of the orders to lift the illegal trespass. Consequently, the court issued the orders claimed by the purchaser and gave the previous owner 21 days from the service of the order to him to comply.
George Coucounis is a lawyer in Larnaca and the founder of George Coucounis Llc, [email protected]