Bank Petition – CPAG demonstration on 27/11/2009

World Bank Demonstration

World Bank Demonstration

“Through the lobbying of UK MP’s, MEP’s and the European Parliament by Cyprus Property Action Group (CPAG) and its supporters, the Cyprus Government has been put under great pressure to take action on the scandalous situation regarding withheld Title Deeds. The main area of risk concerns developers taking mortgages on properties they have also sold to unsuspecting buyers who wait years to obtain Title Deeds and stand to lose their homes should the developer go bust and if the buyers cannot then pay off ‘their’ portion of the mortgage. Whilst in this trap buyers are routinely defrauded and otherwise exploited by their developers. Buyers have little option but to pay up due to the threat of the developer withholding transfer of the Title Deed.” [1]

In the south, by March 2009, developer mortgages had risen to €5.9 billion. With the recession only just beginning to bite in Cyprus it is not unrealistic to expect a surge of developer bankruptcies.

Proposed Legislation
Under the proposed new law there would be three types of Title Deed:

1. Perfect Title – which does not present any illegality. In other words, what they buyer paid for and anything less than this would constitute a breach of contract by the developer.

2. Imperfect Title – is a title which presents minor irregularities. this type of title immediately devalues the property and will probably leave the buyer with court action to force the developer to rectify the problems in order to have the title upgraded to Perfect.

3. Restricted Title – is a title which presents substantial illegalities (e.g. may have a demolition order). It can be issued even without a Completion Certificate and leaves the buyer with legal action to force the developer to rectify the situation, if he is able, to go to court for compensation! In addition, the buyer is forbidden to sell a property, or take out a mortgage, with this Title Deed.

“The Government could appear to be colluding with dishonest developers to breach bona fide sales agreements through their ability to apply for these inadequate type 2 and 3 Title Deeds. Further, that any property becomes immediately stigmatised and therefore devalued upon the issuance of these ‘Title Deeds’.” [1]

CPAG, not content to merely express their disapproval in the media have decided to demonstrate against the Banks who gave these mortgages to developers knowing full well that the property used as security had already been sold.

Demonstrations Against the Banks
“Many buyers in Cyprus have been deceived into buying properties by developers who have withheld the vital fact that there are mortgages on the land on which these properties are built. If  buyers had been informed of the presence of these mortgages then most, if not all, would not have purchased these properties.  This deception has only been possible due to the buyers’ own lawyers failing to provide a duty of care to their clients by not even warning them of the risks of this situation.” [1]

“Finally, the banks involved have effectively made these buyers the ultimate guarantors of these mortgages without their permission or even knowledge.  Also notwithstanding this, that some of these buyers may have personal mortgages from the same bank and have not been notified of the additional risk.” [1]

“This organised deception by this community of developers, lawyers and bankers has underpinned the whole property industry in Cyprus and is a terrible indictment of the people involved and especially of the successive governments who have failed to protect buyers.” [1]

“Moreover, we have evidence of banks’ charging practices e.g. a buyer in difficulties with his mortgage payments is being charged an annual rate of 13.25% (European Central Bank rate plus 4.5% spread plus 7% fluctuating) and the interest is capitalised (added to the original loan) twice a year, therefore charging interest upon interest.” [1] This means that huge debts are being built up which the buyer will probably end up having to pay.

Examples quoted by CPAG:
“We already have a couple whose developer is in difficulties and who have discovered to their horror that he had a mortgage on their property which has not been serviced for 7 years and is now standing at around €90,000.”

“In another situation a couple whose developer was recently jailed for fraud over theirs and 3 other properties (and which also have a demolition order on them!) have discovered that 2 mortgages taken out in 1997 and 1999 have not been serviced since then.  The original debts of Cy£40,000 (€64,000) now stand at €164,000!”

According to CPAG, “there is no doubt that the banks and their unethical practices are at the the root of the major risks buyers in Cyprus currently face. Just as the behaviour of banks worldwide has been the cause of so much damage to the economies of many countries the banks in Cyprus have set up a scenario that will do so much damage unless the Government acts quickly and decisively”

CPAG are so furious with this situation they are holding a demonstration on Friday 27th November 2009 at 10:00hrs outside the International Business Unit and Regional Branch of the Bank of Cyprus in Paphos.  The address is 13 Evagora Palikaridi which is in the centre of Paphos, at the first traffic lights on the Polis road up from the Main Police Station.

They will also be organising other demonstrations against other banks and in other cities. These will be arranged in the new year. The reason they have chosen to start with the Bank of Cyprus is because this bank is the largest lender bank.  In addition the chairman of the bank, Mr Theodoros Aristodemou, is also the chairman of Aristo, the largest developer.

[1] Cyprus Property Action Group

Print Friendly, PDF & Email

Comments are closed.