A memo renewal application must be submitted at least one month before its expiration

A creditor who secures a court decision against a debtor may register it with the Land Registry as a charge on immovable property that is registered and has a title deed in the debtor’s name. With the registration of the decision, an encumbrance is created, known as a memo, and makes the property a guarantee for the payment of the judgment debt.

At the same time, it gives the creditor security in priority over other debts with which the debtor’s property was not specifically encumbered and which is subject to sale to satisfy the court decision.

The existence of a previous charge or mortgage is not affected by the registration of the decision, since the chronological order of priority also determines the rights of each creditor.

In the event that the debt is paid and the judgment satisfied, the creditor is obliged to withdraw the memo by giving written notice to the Land Registry, otherwise they will be liable to the debtor and any other creditor for any damage they may suffer as a result of maintaining the registration.

Any failure on the part of the creditor to act diligently may lead to the loss of the security.

The property of the debtor encumbered by a memo may be sold either upon application by the creditor to the court and securing a sale order or upon application to the Land Registry one year after the registration of the memo.

The registration remains in force for ten years and may be extended by order of the court, provided that the conditions set out in section 56(2) of Chapter 6 are met.

Conditions set by the law

The court shall not make an order extending the registration of the memo unless: (a) the application is made at least one month before the expiry of the period of validity of the memo, (b) the court is in a position, after hearing and considering the application, to make the order before the expiry of the memo, (c) the district land officer has been notified of the application and the time fixed for hearing, and (d) the court is satisfied that the judgment was not obtained in collusion or with the intention of crowding out other creditors and also that the renewal of the memo will not adversely affect the debtor or any other judgment creditor.

Court decision

An application was filed with the Larnaca District Court less than one month before the expiry of a memo with the creditor requesting a court order extending the deadline for its registration, as well as an order extending the validity of the registration of the memo.

The creditor argued that the application was inadvertently not registered within the deadline required by the relevant legislation and that if such an extension is granted no one will be harmed, while on the contrary the creditor will suffer irreparable deprivation of his rights arising from the property security provided to him by the memo.

The senior judge, examining the application, raised the question of whether the inherent powers of the court could be used in order to extend the deadline set by the law. He stressed that article 56 of Cap. 6 does not refer to the existence of a power of the court to extend the time for compliance with the obligations mentioned and this does not constitute a random event or oversight of the legislator.

The registration of a charge on immovable property, as he stated, creates effective rights over it, which for as long as they are valid affect and oppose both the rights of the owner of the property, but also the rights that may have been registered on the property by third parties, creditors of the owner.

In the event of a sale or disposal of the property, any rights that the owner’s creditors may have registered on it and which are still valid at the time of sale, are satisfied by priority strictly based on the time of their registration.

The court concluded that the deadline set out in Article 56 is explicit, as are the consequences that the non-compliance of the memo holder within the deadline of the Law will entail, and the legislator left no room for the exercise of any discretionary power by the court to extend the compliance period and dismissed the application.