Cyprus-Forum.com

[Milo]

Just copied and pasted this section from the CPAG,s website:- According to the Interior Minister last week the 'non-experts'




Unfortunately, the risks taken are now coming home to roost due to the current global financial crisis.

We are also now discovering just how reckless the banks have been with the orgy of lending over the past few years.

Firstly, all banks in Cyprus are making huge provisions for bad debts and the ratio of non-performing loans is steadily increasing as can be seen from all of the banks’ quarterly earning statements.

Secondly, with little or no income currently the developers must be having great problems servicing their mortgages and some are already going bust.

As an indicator of this, the developers’ debt ballooned by 107% between March 2008 and March 2009 to €5.9 billion according to official figures. This debt could yet turn into a toxic timebomb for the banks!

However, in this land of secrecy it is difficult to obtain the current developer mortgage outstandings or the number of properties encumbered by mortgages, or indeed the ratio of developer mortgages which are currently non-performing and in arrears.

Moreover, we have evidence of banks’ charging practices e.g. a buyer in difficulties with his mortgage payments is being charged an annual rate of 13.25% (European Central Bank rate plus 4.5% spread plus 7% fluctuating) and the interest is capitalised (added to the original loan) twice a year, therefore charging interest upon interest.

If they are charging delinquent developers similar rates then a huge problem could be building up for buyers in the event of their developers going bust.
We already have a couple whose developer is in difficulties and who have discovered to their horror that he had a mortgage on their property which has not been serviced for 7 years and is now standing at around €90,000.

In another situation a couple whose developer was recently jailed for fraud over theirs and 3 other properties (and which also have a demolition order on them!) have discovered that 2 mortgages taken out in 1997 and 1999 have not been serviced since then. The original debts of Cy£40,000 (€64,000) now stand at €164,000!

Banking contacts tell us that although non-performing loans are reported after 3 months of non-payment the period for court action or writing off these bad loans is not specified in Cyprus. Remember, under the law here the banks have access to everything on the land not just the land on which they gave the mortgage.

In an article in the Sunday Mail (15/11/2009) the Minister of the Interior stated that the Banks Association had approached him recently requesting legislation to make the liquidation process easier. It is clear therefore where the banks are coming from on this issue.

Also in the same article it appears that the Minister is still formulating additions to the proposed legislation and for the first time appears to be looking at developer mortgages and diminishing the rights of banks. Obviously, the banks will not be giving up any rights without a struggle.

In the meantime, CPAG takes the view that although it is absolutely unjust that buyers have to settle developers’ debts and is fighting to prevent this we understand that some buyers may choose to do this to obtain their Title Deeds, as is happening in some cases already. In this situation the sooner that buyers know that the developer is in financial difficulty the better their options.

The law under Article 51A gives every buyer the right to find out about developer mortgages at the Land Registry using an N50 search form.

However, this only tells the buyer what the original loan was. Given the current uncertain times what they really need to know is the current balance.

CPAG and its supporters therefore demand that the banks agree to, or be forced to, share with any buyer (guarantor!) the balance of any mortgage they are encumbered by.

This will, as a first step, allow buyers and CPAG to understand how badly the banks are currently exploiting the situation having previously caused this massive risk for buyers with their grossly unethical lending practices.

Nevertheless, ultimately the banks will need to be part of the painful solution to address the disgraceful situation regarding developer mortgages and buyer encumbrances. In this they will no doubt require much persuasion and CPAG and its supporters will need to be a major part of this pressure.

Accordingly we urge you to support a demonstration being held on Friday 27th November at 10:00hrs outside the International Business Unit and Regional Branch of the Bank of Cyprus in Paphos. The address is 13 Evagora Palikaridi which is in the centre of Paphos, at the first traffic lights on the Polis road up from the Main Police Station.

Other demonstrations against other banks and in other cities will be arranged in the new year.

We have chosen to start with Bank of Cyprus because this bank is the largest lender bank. In addition the chairman of the bank, Mr Theodoros Aristodemou, is also the chairman of Aristo, the largest developer. Some of you may think this a little incestuous to say the least!

Please support this demonstration against the banks, who are at the root of the main property problem in Cyprus – we need a good turnout to make our case.



The British High Commission is fully supportive of our aims
and takes a keen interest in our activities



Copyright © 2009 Cyprus Property Action Group

[Wingnut]

I've said it before and i'll say it again

Why would you buy a property without a title deed, FFS ???!!!!

you wouldn't ever buy a car without a logbook !

if buyers flat out refused to pay for property without deeds, then the whole problem would not have come into existence

[Tim Drayton]

I've said it before and i'll say it again

Why would you buy a property without a title deed, FFS ???!!!!

you wouldn't ever buy a car without a logbook !

if buyers flat out refused to pay for property without deeds, then the whole problem would not have come into existence

Then you would be restricted to resales. The delay concerns the issuing of title deeds for newly built properties.

[YFred]

I've said it before and i'll say it again

Why would you buy a property without a title deed, FFS ???!!!!

you wouldn't ever buy a car without a logbook !

if buyers flat out refused to pay for property without deeds, then the whole problem would not have come into existence

Then you would be restricted to resales. The delay concerns the issuing of title deeds for newly built properties.

If people didn't buy them, the problem wouldn't exist. Builders would solve the problem themselves instead of exploiting it. They would then bribe the officals to get the deeds to sell. I knew TRNC was operating on third world principles but an EU country FFS?

[Milo]

"The Cyprus government Title Deed proposals are a shambles and a recipe for disaster and we are horrified that they have even been considered for the statute book; they are a legal minefield and a social time-bomb" – says Professor of Law, Criminology & Penal Justice.


"The proposals should be dropped. Otherwise, suffer the little children or should we say, suffer the poor purchasers, sellers and with them the demand for property and thus the economy as a whole."

http://www.news.cyprus-property-buyers. ... r-disaster

[Svetlana]

Hi Milo

Quick question: if a buyer has Specific Peformance, is there any danger of them losing their property if the the holder of their Title Deeds (their developer) goes bankrupt and his/her creditors claim such properties as assets?

lana

[Milo]

If your sale contract was in place BEFORE any mortgage by the Developer then your contract takes precedence, as his mortgage woud be a second charge. What is worrying about this though is the Bank giving a mortgage anyway, what collaterol did they see? This is imho though, so here are more facts on Specific Performance which should be helpful.


http://www.cyprus-property-buyers.com/l ... rmance.htm

[Svetlana]

Thanks, milo

But assuming no mortgage the developer goes bankrupt owing millions of € and he still holds the Title Deeds - can his/her creditors claim the property?

Lana

[YFred]

This from a EU country seems crazy me. If a builder sells a property, then he should not be able to mortgage it, it should be covered under common fraud laws and if the property is mortgaged and then the builder sells it, the money should go to the mortgagee and the deed should be released from the mortgage. How on earth is this situation allowed to continue in a EU country.

It seems to me there is only one safe way of doing it in Cyprus and that is buy the land first so you have the deeds, and then employ a builder to build it.

[Milo]

Thanks, milo

But assuming no mortgage the developer goes bankrupt owing millions of € and he still holds the Title Deeds - can his/her creditors claim the property?

Lana

The Deeds will be classed as 'assets' but it really depends who is making the claim i.e Banks who have loaned on any other of his developments could I assume but a debt owed to a contractor for instance could,nt.

Myself I think the more hoo ha made over this will mean that no-one will lose their property to Banks or anyone else although many are now recieving letters, that really is my reason for keeping it high profile. This country has suffered enough over the years it does,nt need and should,nt have its reputation spoiled like this because of very bad practices by the Banks and of course the rest of the sorry crowd. I have a very good builder who has done everything right in fact perfect, its not right that he too is suffering because of the greed of the few.

Concentrating on unethical practices by the Banks is very important to get them to change tack on what they could start doing in the coming months when Developers are unable to pay their loans.

A professional answer to your query can be answered here

www.cyprus-property-buyers.com/forum