Cyprus-Forum.com

[dpng]

Hi,
On a recent visit to Cyprus I threw caution to the wind and signed up for an off-plan appartment in Paphos. The developer and estate agent took me to the Alphabank housing loan dept and things seemed easy. The solicitor is engaged and the loan is approved. I now have 2 Power of Attorney forms to sign and get notarised at the Cypus High Commission.

But I have already put off 1 visit to sign the forms and now I am having problems convincing myself it is a good move to sign the POAs from the bank (1 is for the bank to act for me and the other is for the solicitor). Even as a lay-person I can see the POA forms are decidedly not looking after my interests. I ran the forms through my UK solicitor who tended to agree that there were virtually carte blanche powers without the need to consult or the ability to terminate the powers. In this respect they were certainly different to the normal POA conditions established by UK solicitors. The bank POA makes it irevocable for the POA to be withdrawn - even when the loans are paid and the bank has no further interest in the property. There is also something that I really am concerned about which is a mortgage taken out for 120% of the total indebtedness to the bank on the date of registration of the mortgage plus interest. I think this means I have to pay 20% more back to the bank than they lent to me as well as the interest and this seems a little unreasonable unless there is something fundamental that I don't understand.
The solicitor POA (drawn up again by the bank) also sets no timeframe, or limitation of powers to the specific task in hand (purchase of a property) so there are massive powers given to the solicitor to open, close, decide without consultation on any matters. In fact I haven't even seen the terms of the mortgage and the solicitor is given powers to agree on her sole discretion such terms. I suspect that the solicitor is bound to act in my interest under the rules for a POA but I personnally feel the powers are so immense.

I am considering at this stage to drop Alphabank and get a loan secured on property in the UK rather than expose myself to what I feel deeply uncomfortable with.

Does any of this sound familiar to others on this forum? What did others do? Are there any specific recommendations, and do all Cyprus banks impose conditions that don't consider the reasonable protection of the customer?

Very interested in your experiences.
Best wishes, dpng.

[cyprusgrump]

It doesn’t sound very promising – especially if the solicitor was recommended by the developer. You should always get independent legal advice and a solicitor that isn’t known to the developer.

Sounds like it would be wise for you to step back from this and spend a bit more time arranging your funds…

[Svetlana]

It is difficult to comment without eeing the POA documents in full; however both should require your approval, either by Fax or Email before money can be spent or any major decision be taken. I imagine both the bank and solicitor are using standard (for Cyprus) POA forms, so tyou should be OK.

The 120% thing really gets to me; in a nutshell it is the figure logged at Land Registry for your loan, not the actual amount you will pay. It is cover any extra risk you subsequently opt to take on: credit card, increase in size or duration of the mortgage - which are both to your advantage. The major advantage is to the bank; should you default on the mortgage and the bank reposesses, they can claim back up 120% of the morgage value (ie make a profit or recover their costs etc.

It can only happen in La La land!

But why have you not challenged your soclitor or bank about this?

Lana

[michalis5354]

I think you need to investigate more what you are going to sign. The bank may at any time impose to you any condition or charges based on the papaer you signed. You may pay higher interest plus other charges If you have long overdue fees for example.

If you are not comfortable with the terms on that paper then take more time and see what other options you have or other alternatives.

[raymanuva]

Alpha bank was totally unprofessional when dealing with my acount. I had to remortgage and move to another bank.

[coredump]

raymanuva, can you elaborate?

I on the contrary have found them the most professional in comparison to the other banks I also have housing loans with (Hellenic & BoC).
As promised they have approved my loan in one day (after I provided all necessary documentation and property valuation has been done) and released the funds in one week time (they needed that week to prepare the paperwork). Hellenic and BoC both wasted months despite promising to complete everything in a couple of weeks (though both approved in a week or so). I was lucky that in both cases sellers did not mind to wait.
Also virtually every bank (at least the "BIG 3") in Cyprus require life insurance policy (other options are to pay higher downpayment and/or interest rate) covering the loan amount and assigned to the bank (for some reason they do not deem mortgaged real estate as sufficient security), and Alpha Bank asks just for fire insurance policy for the property (they even subsidize first year's premium).

[coredump]

dpng, I do not know about your situation with POAs,
however 120% mortgage is OK as Lana explained (it is 110% BTW for loans in CYP).

[dpng]

Thanks to all for the replies. It has been interesting to hear of your experiences. My main concern was the 120% clause but I understand from the responses that I will only actually have to pay 120% if I default and so long as things go as expected I will only pay the 100% (plus interest). I did send an email to the bank to get further details and in particular something in writing about the loan terms and conditions including the costs but I haven't got anything yet. I will chase them for the information. However I would say that Alphabank were quite quick in reviewing my paperwork and granting the mortgage.

My solicitor has now had the contract of sale stamped and lodged at the land registry and this will be submitted to the Council of Ministers when the developer provides the building permit. She assures me that I shouldn't be concerned about the POAs. But I think that I take some comfort from your responses that suggest that this is probably a normal procedure and that the bank operates in a standard manner. So I feel less worried about signing the POAs but perhaps my real priority now should be to see that the loan conditions stack up against my alternatives.

Best wishes to all
dpng

[Svetlana]

Hi Derek

Is your solicitor Penelope or Ioli?

Lana