Deputies on Wednesday were discussing a mechanism aimed at protecting – and preventing – trapped buyers, after Finance Minister Constantinos Petrides submitted a bill to the House legal committee.
The aim is to avoid the situation whereby thousands of homeowners were left without their Title Deeds despite paying for their properties in full because the building developers had mortgages on the properties.
The Law on the Sale of Real Estate 2022 he submitted for discussion aims to ensure the transfer of any property will be executed immediately and as soon as the buyer fulfils their contractual obligations.
“The aim is to protect buyers so that the phenomenon of trapped buyers disappears before it even occurs,” Petrides said.
It has a threefold impact by ensuring the project will be completed, the mortgage will be settled and there will be no issues for buyers to obtain a title for their property, he added.
The bill seeks to ensure new buyers have the legal security that when they fulfil their contractual obligations, the transfer of the property will take place, without obstacles, he added.
Specifically, if the project a developer is working on is mortgaged, the developer will be required to inform the buyer. Depending on the development of the project, the full amount of the sale must be deposited to the bank and the bank will confirm that the project has been completed.
The bank will also provide a written confirmation to the property buyer that by depositing the full amount, the mortgage will be cleared.
Should the bank default on its commitment, the head of the land registry will clear the property of the mortgage.
“This is the only way to ensure buyers’ money will go for the property the buyer is paying for and we will never again see half-finished projects like we did before, with buyers falling victim,” Petrides said.
The procedure follows a Central Bank of Cyprus directive and is compliant with legislation other countries follow, he added.
In 2015, parliament passed a law aimed at helping thousands of owners who had paid for their properties in full but had not been issued with their Title Deeds because the developers had their own mortgages on the properties.
The head of the land registry had been granted the authority to exempt, eliminate, transfer and cancel mortgages and or other encumbrances, depending on the case and under certain conditions, as the state sought to sort out the Title Deed mess.
In July 2018 banks and the legislature struck a gentlemen’s agreement aiming to resolve the matter. In exchange for MPs approving legislation, making it easier for banks to collect their dues, the banks association agreed not to raise any objections over the issue of buyers trapped without Title Deeds as long as the transaction was done in good faith.
The protection afforded to ‘trapped’ property buyers was last year extended until the end of 2022.