Ministers of Legal Affairs: More than 20 thousand stranded real estate buyers

There are currently 60,202 sales documents lodged with the Land Registry and as of early November there were 20,554 stranded buyer cases, with the Land Registry having processed almost 50% of them, the Home Secretary told the House Legal Affairs Committee.

The Minister of Finance Konstantinos Petridis, for his part, said after the session, that the issue of the transfer of real estate ownership titles “constitutes a milestone” in the Recovery and Resilience Plan of the Republic of Cyprus (SAA).

Mr. Petridis, as well as the Minister of the Interior, Nikos Nouris, were invited by the Legal Committee to attend the debate on the amending law on the Sale of Real Estate, as its members had expressed concern in a previous session about some issues concerning stranded buyers.

Mr. Nouris, speaking during the session, also noted that there are 7,500 securities cases that do not expect to ever be issued because there are very serious irregularities, pointing out that out of the approximately 10,000 securities that remain locked up, if it is calculated that there are the 7,500 cases that they are “extremely problematic”, “the problem has practically shrunk”.

During the sessions, it was agreed that some technical issues should be discussed between the Ministries of Finance and the Interior and representatives of the parties through their members in the Committee, before sending the legislation to the Plenary for voting.

In his initial statement, the President of the Committee, Nikos Tornaritis, said that members expressed reservations regarding the constitutionality of provisions of the bill and since the Committee recognizes the seriousness of the matter, as its vote is necessary for the disbursement of the Recovery Fund resources , the presence of the two Ministers was deemed necessary.

Mr. Petridis, in his statements after the session, said that he considers that there was a good discussion and that some technical issues were raised and there is a willingness on the part of the Ministries of Finance and the Interior to see some details “reasonably raised by the deputies so that the bill and to meet the milestone of the Recovery fund”.

He noted that it is “a fairly significant piece of legislation,” which creates a mechanism to safeguard the interests of real estate buyers by ensuring in advance that the transfer of real estate will be executed promptly and once the buyer fulfills his contractual obligations.

Over the past 50 years, he added, “bad practices by land developers and banks culminated in the experience of 2015 and the creation of thousands of stranded buyers, forcing the House of Representatives to legislate to extricate them.” ยป.

“We considered as a Government that it is very important to try to prevent the repetition of this situation”, he said, adding that the bill under discussion was prepared, which was consulted with all those involved and also underwent legal technical control and the purpose of which is the assurance that the project will be completed, that the bank lien will be extinguished and that the buyer’s interest in the title issue, free of mortgage, will be foreclosed.

He explained that this will be achieved in several ways such as if the land developer’s project is a mortgage to the Bank, the seller will have to inform the buyer about it. Gradually and depending on the progress of the project work, the entire amount of the sale should be deposited by the buyer in the bank, in the account of the seller-developer.

The Bank, he said, with the developer’s funds, the bank financing and the money from the sale, will ensure that the project is completed, while giving a written commitment to the buyer that by depositing the entire amount, it will release the project from her mortgage.

Mr. Petridis said that if the bank defaults on its commitments, the Director of Land Registry will intervene and release the property from the mortgage.

“This procedure is consistent with the good practices followed by other countries and is in accordance with the Directive of the Central Bank of Cyprus”, he added, noting that this is the only way to ensure that all of the buyer’s money will be used for the project for which the buyer pays his money and we will never again have the phenomena of unfinished projects, as in the past, with the buyers/consumers themselves victims.

He recalled that the issue of the transfer of real estate title deeds “constitutes a milestone” in the SAA of the Republic of Cyprus in the reform “Strategy to address inadequacies of the property title system”.

The Minister of the Interior, Nikos Nouris, in his own presentation during the session, noted that there are currently 60,202 sales documents filed in the land registry and that at the beginning of November there were 20,554 cases of stranded buyers with the land registry having processed almost 50% of them.

He also said that there are 7,500 cases of securities that he does not expect to ever be issued because there are very serious irregularities, noting that, of the approximately 10,000 securities that remain locked up, if it is calculated that there are 7,500 cases that are “extremely problematic,” “the problem essentially shrunk.”

He also said that they do not think there is a question of constitutionality.

In an observation by AKEL Member of Parliament, Andreas Pasiourtidis, regarding the possibility of a bank refusing to issue a title to a buyer, he said that there is no insurance cover for this, however, there is no indication to date from any banking institution of such behavior, noting that he has no reason to do so. He said he does not see this as one of the biggest problems, as there is no reason for a bank not to proceed to issue the security.

The only point that troubled them, he said, is the position for depositing the entire amount, 100% of the entire amount, and whether and to what extent it should go to 100% or a small percentage, which it will simply be for the issuance of the title so that there is an undertaking on the part of the seller.

The Director of the Land Registry, Hellikos Ilias, clarified that what is being attempted with this bill is the amendment of the existing legislation and that the Law on Special Execution applies, which, as he said, must be the last measure to be taken in a procedure buying and selling.

He said two new parameters are being introduced, which further protect buyers, as the amendments provide a “clean plot” to develop on, “without encumbrances that will be passed on to unsuspecting buyers”, but also that the money given by buyers for a specific development, not to be given elsewhere by the land development professional. He added that it will not be easy to use them for another investment, noting that these are important elements and that it is not by chance that he entered the Recovery and Resilience Plan and begged the Parliament to vote for it.

During the discussion, Mr. Petridis reacted strongly to the suggestions of the representative of the Association of Land Development Entrepreneurs for changes in the proposal, which are necessary, as he said, for buyers from abroad as well as for Cypriot buyers, “so as not to be intimidated” . The representative of the Association said that they have prepared a “compromising proposal”, according to which the percentage of the mortgage depends on the percentage of co-ownership plus 20%, which he said fully covers the banks and also secures the buyer from the beginning. They also requested, among other things, that the lien certificate not include the deposited contracts.

Mr. Petridis said he completely disagrees with the Association’s positions, saying that what they are asking “is unacceptable” and noting that they did not go to the Commission to consult with them again.

Mr. Tornaritis said at the end of the session that they would expect the text to be informally sent to the Committee where the Ministries could consult with representatives of each party on some points.

Read more: Ministry of Finance to suspend divestments: Don’t “shoot ourselves”

Source: KYPE

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