“The service of the notice Type IA is done first by registered letter and not directly by a private bailiff”
A mortgage creditor, in the event of a mortgage debtor being in default, resulting in the whole amount of debt becoming payable and the default being for a period of no less than 120 days from the date it is payable under a loan agreement or the provisions of the law, may undertake the procedure provided for the forced sale of the mortgaged property.
The relevant notice of arrears or claim for the payment of the judgment debt is accompanied by the notice Type Θ provided by law unless the mortgage creditor secured a court judgment or filed an application for the sale of the mortgaged property at auction. If there is no response by the mortgage debtor or any other interested person, the notice Type I is sent accompanied by a statement of account of the debt owed, interest and other expenses and the debtor is required to pay the amount within 45 days from the date of the service of the notice.
Through the notice, he is informed that in case of non-payment, the creditor may exercise his right to sell the property at auction. Also, after the service of the notice, any competent authority, upon submission of a relevant application by the mortgaged creditor, provides information on taxes, dues and obligations burdening the mortgaged property within 15 days from the date of the submission of the relevant application.
If the mortgage debtor or other interested person does not comply with the Type I, the mortgage creditor may serve them with a second notice, Type IA, in which it is stated the property will be sold at auction. This notice is served within a period of no less than 30 days from the specified date and time of the forced sale of the property and the debtor or interested person, may file an appeal to the district court, within 45 days of receipt, to set aside the notice for reasons stated in the law.
The reasons are restrictive: the notice served does not meet the relevant requirements of the law in type or in context, or it has not been duly served, or it has been sent before the expiration of the payment deadline, or a restrictive order has been issued, or the mortgage creditor, if it is a credit institution, refused to participate in a restructuring process, or if the mortgage debtor is approved to participate in the Estia scheme for dealing with non-performing loans and support vulnerable social groups.
Following the service of a Type IA by a private bailiff, a banking institution notified the debtor that his mortgaged property would be sold in electronic auction. He filed an appeal in Paphos. The court in its judgment issued on Ferbuary 5 analysed the provisions of articles 44B and 44C of the Transfer and Mortgage of Properties Law, L.9/65 as amended, and focused on the fact that the service of the notice was made directly by a private bailiff without sending a registered letter first. No effort was made previously by the banking institution to serve the notice through a registered letter as provided in the law.
The court referred to the meaning of the term “service” in article 44IE of Part VIA of the law which provides it means the delivery of a notice through a registered letter sent to the last known address or the registered office of the person it is for or the one written in land registry records. In the event such service is not possible, the notice can be served through a private service.
In this case, the banking institution did not prove that it proceeded with private service after establishing that service by registered post was not possible. The court did not accept the argument of the institution that in any case the debtor and the other interested person became aware of the notice, since the specific service was not legal. Consequently, the court accepted the appeal of the debtor and set aside the Type IA and issued an order annulling and setting aside the auction.
George Coucounis is a lawyer in Larnaca and the founder of George Coucounis Llc, [email protected]