Decision to discharge lawyer for new representation

[Pepper]

Hello all,

I am currently in the process of buying a resale 2 bedroom apartment and I am an EU citizen. Paid 5000 euro reservation fee to the agency in June. Totally green behind the ears, I accepted the estate agents recommendation for a lawyer. He works for the vendor's lawyer who owns the firm but I was told at the time that this is usual practice in Cyprus. I hear you all screaming at me!! He has the same surname as the owner and I suspect related. I cannot find his name on the Cyprus Bar Association website but the vendor's lawyer is there. I did not ask at the time if he had professional indemnity insurance. I'm digging a hole here I know.

The property is on a meticulously maintained complex of 30 units. No chance of title deeds due to drainage pipes being built in the wrong place and no certificate of completion. There is also an outstanding mortgage debt from the developer and the present owners have a bank waiver in place. I got this information from the estate agent. I do not have a huge issue with the title deeds as it's intended use will be long term rent for maybe 15 yrs before using it as a semi permanent residence for ourselves in retirement. We couldn't afford a 2 bedroom with full deeds and we are happy with the price accepted. High finishes in great location and thought we'd make our savings work for us while securing a future home in the sun.

My problem is that our lawyer had CCed the vendors in his initial emails to me which was unsettling at the time. He also asked me to liase direcectly with them to resolve a problem which I did. Communication with him was prompt and courteous but never entailed any real details of due diligence. I am due to fly out to Cyprus in a few weeks and will at that time need to pay signing fee. My last 2 emails have requested an indepth report on his search certificate highlighing any other encumbrances against the property. I asked about the process of a bank waiver and whether I would be covered from any memos lodged against the property in the interim of requesting one. I did not want to inherit any future debt liabilities against the property. No reply and all has gone quiet....since the 23rd.

My question to you....Should I wait and see what the search throws out or am I mad to stick with this lawyer? Can I trust that he will draft a watertight assignment agreement protecting my interests? Should I seek new representation or would I be better to walk away from the appartment altogether and lose my reservation fee? I have the vendor's email that I could contact but don't know if that's advisable. Wish I found this website beforehand. Feeling very deflated and hoping for optimistic suggestions.

[Pantheman]

Hi, sorry to hear about your issue.

Given the fact that he CCed the otherwise, would be enough for me to change lawyers. The search document is in Greek and needs to be carefully deciphered and I would not trust this layer to tell me the truth.

Bank waivers are for individuals NOT properties, you would need to get the waiver in YOUR name to make it valid.

You do not need to walk away losing your deposit, just commission another lawyer and tell yours that you are not happy and are moving away. Of course paying for any work done thus far.

It is the seller's responsibility to provide the search document and your new lawyer can advise accordingly. It is very unprofessional to a. CC the otherwise to your emails and b. Ask you to contact directly the seller to resolve and issue, that his Freaking job.

Bottom line - get another lawyer, makes sure BW in your name - Make sure he explains the search - other encumbrances coming after the initial contract of sale do not affect you where the trapped buyers law in concerned. Get your new lawyer to apply under the trapped buyers law when it has be re-activated - Mae sure if you get as far as a sale, that all communal fees have been paid up to date as well as any other outstanding seller tax liabilities.

Good Luck

[Nigel Howarth]

Hi Pepper

I'm sending you a draft letter to discharge your present lawyer.

(Pan - If you'd like a copy please let me know.)

Regards

[Pepper]

Hi, sorry to hear about your issue.

Given the fact that he CCed the otherwise, would be enough for me to change lawyers. The search document is in Greek and needs to be carefully deciphered and I would not trust this layer to tell me the truth.

Bank waivers are for individuals NOT properties, you would need to get the waiver in YOUR name to make it valid.

You do not need to walk away losing your deposit, just commission another lawyer and tell yours that you are not happy and are moving away. Of course paying for any work done thus far.

It is the seller's responsibility to provide the search document and your new lawyer can advise accordingly. It is very unprofessional to a. CC the otherwise to your emails and b. Ask you to contact directly the seller to resolve and issue, that his Freaking job.

Bottom line - get another lawyer, makes sure BW in your name - Make sure he explains the search - other encumbrances coming after the initial contract of sale do not affect you where the trapped buyers law in concerned. Get your new lawyer to apply under the trapped buyers law when it has be re-activated - Mae sure if you get as far as a sale, that all communal fees have been paid up to date as well as any other outstanding seller tax liabilities.

Good Luck

Hi Pantheman,

Thanks so much for the reply and the good advice. Would you believe I woke up to a reply from my lawyer this morning. We do intend to discharge him now but to pick your brain further, he confirmed that the vendors have a waiver in their name but then went on to say that the creditor in our case is Gordian Holdings who bought out the debts from the bank. He goes on to say that since we have the consent of the bank we should still get the title deed. Previous buyers before us pulled out of the sale. We were just told "cold feet". Before we go looking for another lawyer, would this be a reason to pull out? I don't want to go through more expense if that will be the end advice?
My hubby is ready to throttle me as I convinced him to go for the problem 2 bedroom and not the full titled 1....lol

Regards, Lorraine

[Pepper]

Hi Pepper

I'm sending you a draft letter to discharge your present lawyer.

(Pan - If you'd like a copy please let me know.)

Regards

Thanks a million Nigel. Very helpful.

Regards, Lorraine

[Pantheman]

Hi Pepper

I'm sending you a draft letter to discharge your present lawyer.

(Pan - If you'd like a copy please let me know.)

Regards

Yes pls do send it to me. thx

[Oneiro]

Hi pepper,
I can see it’s been some time since you posted. Would you be able to answer a question for me?
How long did it take to get your waiver from gordian holdings. I’m in a similar position to you but waiting for a waiver now which is holding up on me completing on the assignment order.
Thank you.

[Nigel Howarth]

Hi Oneiro and welcome to the forum

Pepper hasn't visited the forum since late October. I've emailed her asking to reply or send me a reply by email that I can post here.

Did you sign the assignment agreement before gordian acquired the debt?

Regards,

[Pepper]

Hi Oneiro,

Sorry for the late reply. Was away for Christmas and hard to get a minute to myself.
I'm afraid we didn't get as far as applying for the waiver. We pulled out of the sale after discovering over 2 million euros in memos lodged against the complex that my lawyer didn't disclose until pressed. The search certs are in Greek so trust in your lawyer is paramount. We were lucky to bump into a another resident owner on the complex who told us about the memos. The vendors were either covering or ignorant of the fact when questioned. The whole affair was stressful. We had signed a reservation agreement with the estate agents and although we had a copy of the search certs with evidence of undisclosed debt, they did not refund us. They are a fully liscenced and reputable company and they stopped answering my emails. Thought about taking the matter further to the Cyprus Real Estate Agents Registration Council, but was advised it was highly unlikely they'd do anything as these reservation agreements are poorly policed. We will not be siging another one in gthe future until our vetted lawyer looks over it.
The lawyer did say initially that Gordian Holdings said they would issue a waiver in our name for a fee but only after signing the assignment contract. Too risky in my opinion because no guarantee they would hold to their agreement.
We are a lot more educated in Cyprus conveyancing than we were previously, thanks to this site and the people who post. We are back on the trail now but I think full title deeds will be the way to go for us.
Wishing you all the best and I hope your sale goes well for you.

Pepper

[Nigel Howarth]

Hi Pepper

Thanks for getting back to Oneiro

Sorry to hear that you lost your deposit and there are a few lessons to learn from your experience:

1. Always instruct an independent lawyer before signing any papers or handing over any money. (By independent I mean they have no connection whatsoever with anyone else involved in the – e.g. the vendor, estate agent, etc.) The UK Foreign, Commonwealth & Development Office publishes a list of English-speaking lawyers that you can find by clicking here.

2. Instruct the lawyer to get a 'Title Search' on the property (or the development) where your thinking of buying. This will highlight any mortgage, loans, debts, etc. owed by the vendor. You can pay the debts to the creditor and pay the difference to the vendor. However, I suggest you only do this is the property in question has a Title Deed as there may be other issues with the property.

3. Instruct your lawyer to get a company search of a credit reference search for the company selling the property.

4. Do not hand over a reservation fee without having an agreement drawn up by your lawyer stating how much was paid and the circumstances in which it will be refunded and that the fee will be deducted from the agreed sale price of the property.

5. Remember that property is the national sport of Cyprus. To reduce the risk and avoid many of the problems faced by others, restrict you search to properties with their all-important Title Deed.

For Pepper

Your lawyer failed to carry out any due diligence. The Supreme Court ordered a Paphos-based lawyer to pay around €120,000 to his former clients for negligence. For details see Landmark ruling by the Supreme Court.

The Estate agent you used should have warned you of the problems – it is not a reputable company.

Please send me a PM or email with the name of your lawyer and the estate agent.

Regards,

[Pepper]

Thanks for that Nigel.

I have emailed you the details of both legal counsel and estate agent. I have no problem reflecting and sharing our mistakes as I hope it will help others that come here seeking advice, to make informed decisions. It was a strong and expensive learning curve for us.
We are still looking for our place in the sun......but now feel better informed of the potential pitfalls that are embedded within the Cypriot conveyancing process. Education is your armoury :)

Regards,

Pepper

[Oneiro]

Hi Oneiro and welcome to the forum

Pepper hasn't visited the forum since late October. I've emailed her asking to reply or send me a reply by email that I can post here.

Did you sign the assignment agreement before gordian acquired the debt?

Regards,

Hi sorry for the late reply. We signed the assignment agreement after they acquired the debt but the agreement has a clause that we can’t complete without a waiver. Does anyone know how long these waivers take?

[Nigel Howarth]

We signed the assignment agreement after they acquired the debt but the agreement has a clause that we can’t complete without a waiver. Does anyone know how long these waivers take?

I'm sorry to say it's extremely unlikely you'll get a waiver from Gordian. Gordian is a Credit Acquiring Company which is better known as Vulture Fund.

(“Vulture” is a metaphor that compares vulture funds to the behaviour of vultures, birds that prey on carcasses to extract whatever they can from their defenceless victims.)

The developer who built the property you bought probably mortgaged the land on which he was building, but failed to repay the bank. Eventually the bank sold the developers debt to Gordian at a steep discount, believed to be 15% - 20% of the mortgage's book value.

You could start negotiating with Gordian about how much they want to to clear the debt, which will enable you to complete and get the deeds to the property.

Or you could cancel your contract, but you'd lose your deposit.

The lawyer you used failed to carry out due diligence, which would have highlighted the debt, allowing you to walk away from the deal. You could complain to the Cyprus Bar Association, but even if they upheld your complaint, the maximum financial penalty the would impose on the lawyer is a mere €1,000. I expect this is less than you paid the lawyer for their work.

Regards,

[Pantheman]

Nigel, your comment 'Or you could cancel your contract, but you'd lose your deposit.', is not strictly correct, if there is a legal reason that the contract cannot be registered the deposit is returnable. In fact with our clients, if they are not happy to proceed due to the outcome of the due diligence, they pull out and not lose the deposit.

That said we have never reached the signing of the contract before this is discovered. Who was the lawyer??

They should carry indemnity insurance!!!

[Nigel Howarth]

if there is a legal reason that the contract cannot be registered the deposit is returnable.

Thanks Pan - I thought when Oneiro wrote: "we can’t complete without a waiver" she meant completion of the contract - i.e. the transfer and registration of the property in Oneiro's name. (I assumed Oneiro had registered the contract at the Land Registry.)

Cheers,