North Cyprus Property – High Interest Rates

The burning topic at the moment as far as property victims are concerned are auctions. Now, no-one is saying that auctions should not take place. Clearly an auction should be the last resort for a creditor. Having followed the normal prescribed route of reminders, meetings, threat of court proceedings, then if all these fail, of course it will end in auction. But only if the security offered was the property of the borrower.

Lending is a core part of the business of any lending institution. How could any institution be in a position to attract investors if they didn’t balance the business with a prudent lending policy. There is the key word, prudent.

Lending to builders and landowners without checking the provenance of the security offered is not prudent. Applying usury interest rates is not prudent. How can you expect a business to function and be in a position to grow if they are burdened with unreasonable interest rates. Surely it would be in any lending institution’s long term interest to ensure that their borrowers can repay the loans and thus ensure repeat business from the same borrowers. Of course also one would assume in the case of a Bank, not only would they have that client as a borrower but also as business account holder and indeed as the business grows a saver too. Maybe I am a little simplistic in my thoughts, but it seems to me that a Bank that has long term account holders is going to showing a healthy balance sheet.

Of course, there is the counter argument that any business person who signs up to a loan with usury rates applied, should not be in business. They say a fool and his money are soon parted, unfortunately it is us, the innocent bystanders who have been made a fools of.

Instead of using something they still own as collateral, the builders/landowners have been using property they have already sold instead. The archiac laws and the protracted Permission to Purchase processing have allowed this to happen. But are the archaic law entirely to blame? The Banks and even the court system have allegedly contributed to the problem.

The Banks have failed in a duty of care to their account holders by not applying due diligence when handing out these loans. Did they check if the security did still belong to the borrower? They too know the problems caused by the archaic law and the PTP system, what safeguards did they take, what checks did they make? Did they for instance ask the borrower to confirm, in writing that they had not sold the security on. It may sound obvious to you and me, but had they done even that one simple thing, the act of signing it falsely would have been fraud, obtaining money under false pretences and yes even theft. If you walk into a shop, take an item thus depriving the shop keeper of it and then walk out without paying, you are a thief.

Using the same analogy, if a builder sells you a villa, then uses it as security for a loan, reneges on that loan, then the Bank take it from you, you have been deprived of your property therefore an act of theft has taken place. A crime – criminal, not civil, so why aren’t the police chasing these people.

Of course then we have to establish who has been defrauded, was it the Bank by accepting the written statement that the property was the possession of the borrower, back to due diligence or prudent lending. I think it was, although when you read of interest rates of 250% you then have to ask yourself, was it a conspiracy orchestrated between the landowner/builder and the Bank?

In the same way the court system has allegedly let us down by allowing Memorandums to be placed on properties falsely used as security. Tutuska victims are now in the ridiculous position of having to accept a Memorandum on their own properties and be way down the line of creditors. How must it feel to know your home has been used as security for debts not incurred by you, over and over when you have paid for it in full.

To say that the system is flawed would surely qualify as the understatement of the century. It has to be changed not just for future purchasers but for past purchasers so badly affected by it.

I pointed out that the Estate Agents Law was applied retrospectively in that Contracts pre-dating the law were allowed to be registered. The counter argument put to me was, registration of old Contracts was allowed but the effect of the registration started from the date of registration and not the Contract date, therefore any mortgages registered between the Contract date and the registration were valid. Well I think I had worked that one out for myself, I just hope Akfinans are having a dreadful weekend in my villa and I hope the rain is coming in. I still think the fact that we were allowed to have our old Contracts registered at all is a retrospective application of that law.

The property market here in the TRNC is on its knees, it will only recover when Justice is done and seen to be done. We love the TRNC so it cannot happen soon enough for us.

Never give in never give up.

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