The Cyprus Government is to attempt resolving the title deeds problem caused by developers selling mortgaged properties to new buyers and overseas property investors.
A law passed by the Cyprus government in 2015 aimed to sort out the mess created by the failure to issue Title Deeds to people who paid for their property, either because the property was mortgaged by the developer, or the state could not go ahead with the transfer because of outstanding taxes.
Developers’ land and buildings are counted as assets that need to be offset against their debt to banks, therefore this gave lenders a claim on investor’s properties that had been mortgaged by developers.
It is estimated by the land registry that there are around 70,000 properties affected by the problem.
The 2015 law aimed to resolve the issue by granting the head of the land registry the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions.
However, following a string of court decisions, where banks objected to the law, the land registry suspended procedures.
About 250 cases have been brought to court by lenders opposing the 2015 law on title deeds, many being won largely on the grounds that the buyer’s claim on the property infringed on the contract between the lender and the developer.
In September however, the Larnaca district court did uphold the 2015 law, allowing trapped property buyers to obtain their Title Deeds irrespective of the developers’ own commitments to banks.
Due to the mixed results of the 2015 law introduced to sort out the title deeds mess, the Cyprus government is reconsidering legislation.
In parliament last week, land registry director Andreas Socratous said an amending law has been drafted whereby, in order for a bill of sale to be submitted to the land registry, the property in question must be free of any encumbrances.
It remains to be seen how this new idea will help the 70,000 buyers previously affected.