Cyprus Property Action Group

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Updates -

November 2008 - note this update was sent out by email to our mailing list

Title Deeds and the Financial Crisis `

Property Slump?  Credit Crunch?  Global Recession? – The Cyprus newspaper pundits have been saying it could never happen here because Cyprus is different from anywhere else.    It certainly is different – dangerously and dishonestly different! 

A place where Title Deeds are withheld by devious developers who take mortgages out on the land upon which buyers’ fully paid for properties are built.  And if the developer goes bust buyers can lose their properties as the banks who enter into this unethical lending have first priority on the land and everything built upon that land.

Even though falls of over 40% in property purchases this year so far are being reluctantly  revealed and the stock market has lost nearly 70% this year with bank stocks taking an extra battering, the Government are still in denial about the extent of the risk.

 Developers currently have record mortgages of over €4billion using their clients’ homes as collateral for these loans – just how unethical is this lending ?

The latest Land Registry figures show that still pending are 29,949 transfers of Title Deeds to foreigners - which obviously affects at least 60,000 people who bought homes here. According to the same Land Registry figures, the going rate for Title Deed transfers over the last three and a half years averages just over 1,600 per year, so at this rate many buyers will be at risk for many years.  (Clearly, our Cypriot compatriates are in the same risk situation and their numbers much greater.)

However, our prime concern is with the potentially catastrophic risk we are facing over the next few weeks and months - and therefore it is clear that we must act now!

Whilst in this Title Deed Trap, often for many years, mainly foreign buyers are routinely defrauded and exploited by developers with the buyers’ own lawyer turning a blind eye as do, even more shockingly, the Authorities. 

Please see the article in our website Press Articles section - “Property tax scam: you’re on your own” which appeared in the Cyprus Sunday Mail (2nd November).  See also “Cancellation fees are illegally claimed” by lawyer George Coucounis – yet another multi-million extortion by these dishonest developers and which the Government of Cyprus has allowed all these years.

For those of you who haven’t yet read our latest Immovable Property Tax (IPT) Guide on the website, we recommend you study the detail of this “organised crime” which has been practised by developers for years.


We are also now publishing on the website the CPAG Report which was commissioned by the former Finance Minister, Michael Sarris, and delivered on 3rd January this year
  -  under “CYPRUS PROPERTY PITFALLS - a time for ACTION ”.

Mr Sarris replied, “I would like to refer to your  letter dated January 2nd, 2008, and to thank you for sharing with us the Report “Cyprus Property Pitfalls”.  We found the Report very useful and we are in the process of analyzing its content and concrete suggestions.  I look forward to continuing the dialogue on this issue, shortly on the basis of the results of this analysis which we expect to complete by the end of March 2008.”

CPAG had, on very good authority, heard that the Finance Ministry were actually investigating matters surrounding our Report - investigations which appeared to cease with the incoming new Government after the elections. 

After the elections the 68-page report was also sent directly to the current Minister of the Interior, the Minister of Justice and Minister of Finance earlier this year.  Nevertheless, since this time no-one in Government has ever refuted anything in the report   - nor however have they had the courtesy to formally respond.

(Clearly, since the date we delivered the Report CPAG has gleaned a great deal more information on the additional pitfalls of buying property in Cyprus.)

Even so, most fair-minded people would agree that our findings show a shocking picture of this disorganised, dishonest and corrupt industry sector, something that most governments would never have allowed to happen in the first place especially when the economy is so reliant on this industry sector.         

Unfortunately the Government of Cyprus currently appears to be unwilling or indeed unable to do anything about this scandalous state of affairs.

It would appear to most that this is because they are beholden to the vested interests who benefit from this unholy situation – the developers obviously, the banks who make major amounts of interest (over €200million per annum) on the developer mortgages, and the legal fraternity who as usual make money out of all this chaos.  Please note that around 50% of all Cypriot MP’s  are also lawyers and therefore can put a stranglehold on Parliament to protect the dire status quo on behalf of the vested interests.

Ultimately however the blame for the shambles which surrounds the Cyprus property market must belong 100% to this and previous Cyprus Governments for failing to regulate the industry properly and for allowing this unethical lending to developers which would be an anathema in any other modern EU state.

Since the new Government came into power although they have granted CPAG one joint meeting with the Minister of the Interior and (part-time) the Minister of Commerce, Industry and Tourism, unfortunately, nothing substantial was discussed or suggested apart from ‘sticking plaster’ proposals. We anticipate more of the same.

In a recent example the Minister of the Interior has talked about new Title Deed laws when all that seems to be planned is very little and has no effect on the real problem. Firstly, an amnesty to allow developers who have previously been denied a Completion Certificate to bypass the normal checks and therefore to be in position to apply for Title Deeds.  This ‘reward’ for errant developers will affect a limited number of buyers and is being done primarily to collect the resultant transfer taxes in order to shore up the public finances. Secondly, as we understand it from rumours, a plan for future properties where a form of Title Deed is available at completion time. If this is the case then it will also be fraught with problems due to lack of Completion Certificates at this juncture and the inabilty of the Government to enforce this legal requirement.  

Moreover, the Minister has stated categorically to us that he has no plans to change anything retrospectively.  Therefore the vast majority of buyers whose developers have outstanding mortgages are in the same very risky situation – and the Government currently intends to do nothing about this !

As you will gather from the tone of this note, CPAG are very disappointed that the Government has chosen not to respond to any of our overtures and therefore we are now moving into the first part of Phase 2 of our strategy.

Part of this particular phase will centre on enlisting the help of external bodies to pressure the Government of Cyprus.

As EU citizens we have EU Fundamental Rights.  For example we have the right to Consumer Protection (Article 38) and Non-Discrimination (21) but more importantly we have the right to Good Administration (Good Government) (41), Property Rights (17) and the right to Petition the EU Parliament (44).

Currently, CPAG are communicating with the EU at various levels.  In addition we have been in contact with the UK Office of Fair Trading who are now sympathetic to our cause.  Remember that many developers have registered offices in the UK and these and other developers also attend exhibitions in the UK to promote their businesses.

Due to the increasingly risky financial situation, where some developers will go bust (e.g. DND Developers recently) it is vital that we all work together to ensure that the Government of Cyprus stands by its  responsibilities; having allowed this scandalous Title Deed Trap situation to occur due to its failure to adequately protect its citizens’ property rights, despite these rights being enshrined in the Constitution - which is the supreme law in Cyprus.    

So how can we achieve this and how can you help yourselves and CPAG ?

It is a fact naturally that the majority of the people registered on our website are British due to the demographics of foreign buyers in Cyprus.  However, we do not underestimate the potential impact that our other European colleagues could make in their respective countries and we call on them to find similar ways to lobby the EU and their own Government to put pressure on Cyprus.

Currently, the Government of Cyprus continues to lobby on the international stage for Property Rights, Respect for Law and Order, Enforcement of Laws and EU values.

Moreover, we at CPAG also wholeheartedly support a just and lasting settlement of the Cyprus problem with restitution of property rights for all displaced owners of property – we believe in property rights !

However, what CPAG and its supporters want to know is when are the buyers of property in the Republic (both Cypriot and non-Cypriot) going to be afforded these Property Rights, Enforcement of Laws and EU values by the Government ??

We would therefore urge you, dear colleagues, to write to your home town MP and also your MEP, especially if you do not have your Title Deeds yet, or if you have been exploited (IPT etc) whilst in the Title Deed trap and also if you just believe that what happens in Cyprus has no place in the EU !      (Note : you can find your  UK MEP on  www.europarl.org.uk  or for other EU citizens on www.europarl.europa.eu ,  whereas www.parliament.uk will give you your local MP in the UK).  We would also request that UK buyers write to the Prime Minister Gordon Brown.

Please note that the British Government became heavily involved with the Government of Iceland recently,  forcing them to guarantee the deposits of British citizens held by Icelandic banks.

Your letters should be used to urge your MP and MEP  that they put pressure on either national Government (MP) or the EU (MEP) specifically to :-

1) Exert pressure on Cyprus to adhere to the Constitution of Cyprus in protecting all buyers’ property rights. 

2) That Cyprus should also follow EU and UN charters on the protection of property rights, a copy of which is attached to this update.
 
3) That in the event of a developer default on a mortgage that the buyers’ property rights are no longer handed to the lender bank on a plate.

4)  Specifically, that the Government of Cyprus should guarantee every sales contract which has been officially lodged with the Land Registry, even in the event of a developer default. (N.B. - let us not forget that they are currently standing behind the local banks with guarantees on bank deposits).

5) That the Government should also be forced to develop a strategy and timetable for transfers of all outstanding Title Deeds.

Sample letters, including one to Gordon Brown, are available upon request.

By the way, hard copies of the CPAG Report can be downloaded from our website if anyone wishes to include this with their letter to their MP.  We did not send the Report itself with this update as we know that some of you have mailbox restrictions. However, for your information we plan to send a copy of the CPAG Report to all UK MEPs via their emails.

We will be announcing other significant measures as part two of this phase in our ongoing strategy in the next week or so, and additionally, we will now start involving the international press.  We have been contacted already by various publications in the past, however if any of you have good contacts in the media we would be grateful for your assistance in this regard.

Finally, these could be dangerous times for many buyers caught in the Title Deed trap – for you and our other supporters this is your opportunity to contribute to CPAG’s efforts to change this scandalous situation  - so please start writing now ! 

Thank you in advance for your support.

 

Kind regards,

CPAG 

 

 

International Legal texts for the Protection of Private Property as a Human Right


1.The Universal Declaration on Human Rights of the United Nations General Assembly, December 10, 1948

Article 17

Everyone has the right to own property alone as well as in association with others. No one shall be arbitrarily deprived of his property.


2. The European Convention for the Protection
of Human Rights and Fundamental Freedoms

Article 1 of the Protocol 1 to the Convention:

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

3. The European Parliament Declaration of fundamental rights and freedoms.

Article 9:

The right of ownership shall be guaranteed. No one shall be deprived of their possessions except where deemed necessary in the public interest and in the cases and subject to the conditions provided for by law and subject to fair compensation.


4. The European Charter of Fundamental Rights (Nice)

Article 17: Right to Property.

Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions except in the public interest and in cases and under the conditions provided for by law subject to fair compensation being paid in good time for their loss.

5. Constitution of the Republic of Cyprus
Article 23 of the Constitution states:

  1. Every person, alone or jointly with others, has the right to acquire, own possess, enjoy or dispose of any movable or immovable property and has the right to respect for such right.

 

  1. No deprivation or restriction or limitation of any such right shall be made except as provided in this Article.