Hidden Mortgage/Trapped Buyers Law

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Hidden Mortgage/Trapped Buyers Law

Post by Friend » 20 Feb 2018 16:24

Dear Nigel, Sometime ago some neighbours submitted an application under the Hidden Mortgage/Trapped Buyers Law. Just recently they chased up progress at the Paphos Land Registry only to be informed that the bank (the developer has a mortgage on the land) have made an objection and therefore they must now take court action. Being aware of the law and subsequent follow on developments, especially in 2017, this statement came as a bit of surprise to me as I have not read of any changes to the law. If I am correct then one of the objectives of the law was to allow the DLO to authorised the issue of title deeds even if the developer had mortgaged the land and I was not aware that part of the process was to contact the banks. Please could you clarify the situation so that I can advise my neighbours accordingly. Thank you

Nigel Howarth
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Re: Hidden Mortgage/Trapped Buyers Law

Post by Nigel Howarth » 20 Feb 2018 18:30

Dear Friend

Unfortunately the banks have won court cases in which they argued that the trapped buyers' contracts largely on the grounds that the buyer’s claim on the property infringed on the contract between the bank and the developer.

I've published a few articles on the subject:

Banks playing a dirty game

Another stab at resolving the Title Deeds mess

Government striving for Title Deeds solution

I'm afraid your neighbours will have to wait until the matter has been resolved. As far as I am aware it's only those who bought without the need for a loan that are affected.

In cases where the banks have obtained interim judgements, the Land Registries are issuing Title Deeds but they cannot be transferred.

The lower court rulings have been appealed to the Supreme Court; they will make a final ruling on the matter.


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Re: Hidden Mortgage/Trapped Buyers Law

Post by Friend » 21 Feb 2018 09:29

Dear Nigel

Thank you for your timely response.

Having again read the articles that you highlighted in your response I am still somewhat confused and unsure what to tell my neighbours. The final article as published in January 2018 still stated that " Nonetheless the attorney-general’s office had instructed the departments involved to continue implementing the law while appeals are filed at the Supreme Court, which will have the final say on the matter"

Not sure what you mean by "As far as I am aware it's only those who bought without the need for a loan that are affected"

It makes sense in the cases where the banks have obtained interim judgements and where the Land Registries are issuing Title Deeds that they cannot transferred them to the property owners until the Supreme Court have made their final ruling on the matter. However, I am not sure this applies to my neighbours; if it was the case why would the Paphos Land Registry inform them that the bank have made an objection and therefore they must now take court action? The important part of the statement being "why they must take court action"

As said in my initial question I have not yet read of any changes to the law nor that the Land Registry had again suspended procedures. Therefore I suppose that I should advise my neighbours to go back to the Land Registry to clarify their statement?

Regards Friend

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Re: Hidden Mortgage/Trapped Buyers Law

Post by Pantheman » 21 Feb 2018 10:00

Dear Friend,

I understand your confusion and indeed it is a very confusing situation, but I would like to clarify a couple of things.

1. When all these court cases came about, the Land Registries had decided to stop accepting anymore application and would suspend work on the ones already made pending further clarification by Parliament as they were supposed to be reviewing and updating this law. However, The Attorney General, gave an instruction for the Land Registries to continue as is until there is either a law change or a Supreme Court ruling on the matter.

2. The idea of the law is to remove ones property on pre (developer) mortgaged land so that the property would not have that encumbrance placed upon it, however, the original lending bank, that gave the developer the initial mortgage already had such an encumbrance under the Mortgage law and as such, has the right to object or otherwise. It really depends upon the amounts the developer owes to the bank and the banks refusal (and they have this right) allow it collateral to be released.

The only thing you can tell you neighbour is, unfortunately, in his case, that he needs to wait and see what comes next. In addition, he could always approach the bank (not an ideal situation) and make an offer of money for a Bank waiver and to be released from this developer debt. This is now becoming a popular (and illegal, IMHO) way forward for those that want to sell to be able to be freed from the banks. In short the owners are being 'shafted' yet again in favour of the developers.

My final words are: 'be-careful what you wish for', because, even if you did get the deeds by this method, if the developer has unfinished business, the title will be burdened with notes preventing him from selling or transferring (except in case of death), or even mortgaging the property until the notes have been removed. And how do they get removed I hear you ask?? Guess, more money to the authorities.

IMHO, the essence of the law was good, but it was ill thought out by, most probably people that are out of touch with reality, and the consequences of this as I see it, is to release the developer from doing the work of producing the deeds (the Government has now taken it on), and to get the home owners to pay for the developers short comings after has has been fully paid for the properties he sold.

We do need a new system and fast to get over this, given that some district courts even claimed that the law was non-constitutional altogether!!!

So all in all, its a waiting game I'm sorry to say.

Good luck all the same.

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