Title Deeds and Prior Loan on the Land

[Flightnite]

Hi Nigel,

I bought my apartments in Cyprus 7 years ago, and to date I haven't heard anything about the issung of title deeds. I know the company are going through their struggles. The company have also demonstrated some questionable practices. So when I put all these things together, I suspect the developer may have taken out a loan on the land before my apartment was purchased, and may also have charges against them. This is my theory behind them not issuing title deeds - despite the fact that three years ago they went through the administrative process of getting a completion certiificate (fire department certification etc). So my questions are as follows:-

1. What is the best way to establish whether there was a loan, or is a charge, on the land?
2. If the company were to become bankrupt - and there was already a loan on the land before my purchase - would I potentially lose my property?
3. Is there was a loan on the land, could this mean that the contract is void, and that potentially I could even cancel my mortgage and get my money back? (after all it might compromise the integrity of the loan that was originally to me by the bank)

I'm fearful that developer is going to fold soon; and with it my rights to my investment.

I look forward to hearing from you

Regards
Mark

[Nigel Howarth]

Hi Mark and welcome to the forum.

Unfortunately, many people have been deceived into buying property built on land that the developer had previously mortgaged to the bank.

To see whether there are loans, mortgages or any other charges on the land you need to get the Land Registry to carry out a Title Search. This will cost you around €17.50 and information and forms can be found in my Cyprus Property News at New title search procedures in Cyprus.

This will show the amount of the charges/loans at the time they were lodged at the Land Registry. These may have changed with the passage of time - e.g. the developer may have repaid all/part of the mortgage - or the amount could have increased if he's not been maintaining the repayments as the bank will have added interest. Unfortunately, as the bank considers this information to be confidential, it will not tell you the current balance of any loans.

Assuming that the were unpaid charges on the land and the company went bankrupt, the company would fall into the hands of the Official Receiver - and a court may appoint a liquidator to sell of the company's assets to pay the creditors. If this should happen then there will costs to consider:

1. The liquidator's charges - usually they charge the same as the Official Receiver - 11% of the price you paid for the property.

2. A share of the costs required to repay the creditors.

Although you are not a 'secured creditor', it isn't strictly true to say that you're an 'unsecured creditor' as your contract of sale, which will (should) have been deposited at the Land Registry means that you will have a claim on the company's assets.

But there is a risk that you could lose the property if you were unable/didn't want to pay the additional costs involved.

If there is a 'hidden' loan on the land, you should submit a complaint to the Cyprus Competition and Consumer Protection Service (CCPS). For more information and a sample complaint form, please see the Cyprus Property Action Group's Consumer Protection Service page.

(The European Commission has opened infringement proceedings against Cyprus regarding the application of EU Directives on unfair commercial practices and unfair contract terms - you can read more about that at Action against Cyprus - the CCPS is the organisation charged with enforcing the law relating to these matters).

DO NOT CANCEL YOUR MORTGAGE as this will put you in a weaker position should the bank push the developer into receivership.

Regards,