Cyprus Property | Professional Indemnity Insurance

Professional Indemnity InsuranceCyprus Property – Professional Indemnity Insurance

The following was submitted to Cyprus Today in response to news that the TRNC government are allowing ex-pats to buy three properties instead of one. The document was passed on to NCFP with the instruction that we were not to publish it until Cyprus Today was allowed to publish it first, or declined to do so, in their 22nd February 2014 issue. We’re not sure why we should wait as the content, as you will read, is important advice to anyone thinking of buying property here. As you will also see we did hold back with publication until Cyprus Today went to press.

“I am absolutely amazed at the news of the TRNC government’s “drive to shock-start” the economy and restore confidence in the real estate sector by increasing the number of properties that foreigners can buy from one to three as reported recently by your Chief Reporter, Kerem Hasan.

If only it was that simple!

I have made numerous representations to the TRNC government as to how confidence in investment to this country can be achieved; most of my presentations being made to the previous government’s Ministry of Finance headed by Ersin Tatar. He liked the presentations and asked for a task force to be set up by the then YAGA (Invest In North Cyprus Agency affiliated to the Prime Ministry) Director, Ayşe Dönmezer, to spearhead the setting up of the necessary instruments to bring confidence into the industry be it real estate or otherwise.

Here is the presentation:-

“The idea is to bring confidence back to the market by introducing standards brought about by duty of care. Duty of care is the perquisite to any successful business which is accomplished by building confidence. Confidence is paramount to the Investor / Purchaser, confidence is knowing that you are dealing with a professional that is looking after your interests/investments.

In most commercially successful countries confidence is achieved by companies having globally recognised Professional Indemnity Insurance to protect the client / investor and their own company.

To quote Lord Ken Maginnis on the subject: people leave their brains at Stansted Airport when they visit the TRNC” but in reality they have taken for granted that the Lawyer, Builder, Architect, Estate agent, and all other professionals working in the TRNC have the Insurances that are mandatory in commercially successful countries which includes the whole of the EU.

Until a few months ago these insurances were unavailable, the deputy head of the Cyprus Turkish Building Contractors Association, Mr. Faik Dağaştı and the Head of  the Chamber of Civil Engineers, Özgün Akcan  said that “we have been trying to get these insurances for 15 years” and “thanks for the time that you have put in over the past three years in order to achieve this and this will bring back confidence to the Property market.”

What is Professional Indemnity Insurance?

Professional Indemnity Insurance provides essential financial protection for a wide range of professional advisers. In the event that a client suffers financial loss as a result of alleged neglect, error or omission Professional Indemnity Insurance will meet the cost of defending claims and any damages payable. Any person who gives advice, designs, or offers similar services in a professional capacity is seen by clients as an expert. In these times of high consumer awareness, clients will not hesitate to pursue a claim if they feel that they have received sub-standard service.

The need for Professional Indemnity Insurance has never been greater. While some professional people see Professional Indemnity Insurance as an unnecessary overhead, it is known from experience that any professional can produce substantial claims. Court awards have risen sharply in recent years. Without insurance, the financial security of a business is threatened.

If you are buying a house or investing in a building Project then you should ask yourself a few simple questions:

  • Does the Lawyer you are instructing for your purchase/investment have PI insurance (this is mandatory in the EU and South Cyprus).
  • Is /was the property designed by an Architect/Engineer with PI insurance (this is mandatory in EU and South Cyprus).
  • Does the Building Contractor have PI insurance.
  • Does the Estate Agent have PI insurance.

 If the answer to any of these Questions is “no” then you should ask yourself “why?” Anyone who works in the property industry should advise you not to use the services of a company that does not hold PI insurance until they have the appropriate PI insurance in place.

If they say “yes” to these questions you will know that your investment /property purchase is 100% safe.

  • If the Lawyer makes a mistake then he is insured and your investment is secure
  • The Architect that designs the property can as part of his PI insurance issue a 12 year Construction            Industry Council warranty. If the design fails he is insured.
  • If the Builder makes a mistake in the Construction works then he is insured
  • If the Estate Agent makes a mistake they are also insured.”

Following this presentation to the government various professional bodies, including the Bar association of lawyers, welcomed this as a positive development for the growth of the TRNC industry. However, when approached to take out the PI policies, underwritten by Lloyds of London, no lawyers or indeed any professional institution were forthcoming citing it wasn’t compulsory. An esteemed and experienced Turkish Cypriot lawyer informed me that under the old Colonial law “lawyers could not sue another lawyer” therefore it was felt the insurance was merely an unwarranted expense. Even though, across the border, a Turkish Cypriot lawyer or lawyers of any nationality must have PI insurance in order to practice in Greek Cypriot/EU courts.

The government may just as well allow “foreigners” to buy up to one hundred properties with the incentive of zero tax if it wants to. Until such time Professional Indemnity is made mandatory, we shall continue to witness the problems of foreign and local investment suffering the intolerable heartaches that we have seen and continue to see to date!

Altan Houssein, Küçük Erenköy”

Sound advice, but how will this message ever get to prospective buyers?

Print Friendly, PDF & Email

Comments are closed.