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Supreme Court rules against Anastasiades on foreclosures bill

Foreclosures

The supreme court has ruled that a bill passed by parliament last July extending a moratorium on foreclosures until the end of October 2021 was not unconstitutional and should therefore now be published in the government gazette and take the force of law, an announcement revealed on Tuesday.

In a judgment dated June 6, the court overruled the objections raised by the attorney-general – representing President of the Republic Nicos Anastasiades – and said the bill violated neither the right to freely enter into a contract nor the principle of separation of powers between the executive and legislative branches of government.

Moreover, the court found that the state did not prove its case when arguing that extending the moratorium on foreclosures would cause banks to increase their provisions on loans, given that the extension was “a temporary measure.”

The moratorium bill had been passed by the House on July 8, 2021. The president refused to sign it, and sent it back to parliament for reconsideration. Parliament stuck to its guns, refusing to withdraw the bill. Anastasiades then referred the matter to the supreme court.

In rejecting the bill, Anastasiades had argued that the suspension of the sale of pledged property had been going on since December 2020.

This freeze on foreclosures, he added, had therefore ceased to be temporary, both for borrowers and for lenders, due to constant extensions by a vote of the House of Representatives.

According to Anastasiades, the suspension mainly protected strategic defaulters and increased the risk of downgrading both banks and the state.

In addition, he pointed out that the horizontal suspension of the process of sales of collateralised real estate is associated with an increase in budget expenditures, since this makes it impossible to repay the collateral of borrowers, leading to an increase in banks’ need for capital and loans to improve the country’s credit rating.

 

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