Currently there are registered in the land registry, 60,202 sale documents and at the beginning of November there were 20,554 cases of stranded buyers, with the land registry having processed almost 50% of them, the Home Secretary told the House Legal Affairs Committee.
Finance Minister Constantinos Petrides, for his part, said after the session that the issue of the transfer of property titles "is a milestone" in the Republic of Cyprus' Recovery and Resilience Plan (RPRP).
Petrides, as well as Interior Minister Nikos Nouris, had been invited by the Legal Affairs Committee to attend the debate on the Property Sale Amendment Law, as its members had expressed concern at a previous meeting about some issues concerning stranded buyers.
Nouris, speaking at the session, also noted that there are 7,500 title cases that they do not expect to ever be issued because there are very serious irregularities, noting that of the approximately 10,000 remaining encapsulated titles, if you count the 7,500 cases that are "extremely problematic", "the problem has actually shrunk."
At the meetings it was agreed that some technical issues would be discussed between the Ministries of Finance and Interior and representatives of the parties through their members in the committee before the legislation is sent to the plenary for a vote.
In his initial statement, Committee Chairman Nikos Tornaritis said that members expressed reservations regarding the constitutionality of provisions of the bill and since the Committee recognizes the seriousness of the issue, as its passage is necessary for the disbursement of Recovery Fund resources, it was deemed necessary for the two Ministers to be present.
Petrides, in a statement after the meeting, said he believes that there was a good discussion and that some technical issues were raised and there is a willingness on the part of the Ministries of Finance and Interior to see some details "that were reasonably raised by the MPs so that the bill can be passed and we can meet the milestone of the Recovery Fund".
He noted that it is "quite an important bill", which creates a mechanism to safeguard the interests of property buyers by ensuring in advance that the transfer of property is executed immediately and as soon as the buyer fulfils its contractual obligations.
Over the past 50 years, he added, "the bad practices followed by land developers and banks culminated with the 2015 experience and the creation of thousands of stranded buyers, forcing the House of Representatives to legislate to extricate them."
"We felt as a government that it is very important to try to prevent this situation from happening again," he said, adding that the bill under discussion was prepared, which was consulted with all stakeholders and was also subjected to legislative scrutiny, the purpose of which is to ensure that the project is completed, that the bank's mortgage is eliminated and that the buyer's interests in relation to the issuance of a title, without a mortgage, are locked in.
He explained that this will be achieved in a number of ways such as, if the land developer's project is mortgaged to the bank, the seller will have to inform the buyer. Gradually and depending on the progress of the project, the full amount of the sale, should be deposited by the buyer in the bank, in the account of the seller developer.
The bank, he said, with the funds from the debtor, the financing from the bank and the money from the sale, will ensure that the project will be completed, while committing in writing to the buyer that by depositing the full amount, it will release the project from its mortgage.
Petrides said that if the bank defaults on its commitments, the Director of Lands will intervene and release the property from the mortgage.
"This procedure is in line with the good practices followed by other countries and is in accordance with a Central Bank of Cyprus Directive," he added, noting that this is the only way to ensure that all the buyer's money will be used for the project for which the buyer is paying his money and we will not have again phenomena of unfinished projects, as in the past, with victims being the buyers/consumers themselves.
He recalled that the issue of transfer of title deeds of immovable property "is a milestone" in the Republic of Cyprus' SAA in the reform "Strategy to address inefficiencies in the title deeds system".
Interior Minister Nikos Nouris, in his remarks at the meeting, noted that there are currently 60,202 sale documents filed with the land registry and that at the beginning of November there were 20,554 cases of stranded buyers with the land registry having processed almost 50% of them.
He also said that there are 7,500 title cases that they do not expect to ever be issued because there are very serious irregularities, noting that of the approximately 10,000 remaining encapsulated titles, if you count the 7,500 cases that are "extremely problematic," "the problem has actually shrunk."
He also said that they do not believe there is a constitutionality issue.
In response to a remark by AKEL MP Andreas Pasiourtidis about the possibility of a bank refusing to issue a title to a buyer, he said there is no safeguard for this but there is no indication to date from any banking institution of such behaviour, noting that it has no reason to do so. He said he did not see this as one of the biggest problems, as there is no reason for a bank not to proceed to issue the title.
The only point of concern, he said, is the position on the deposit of the entire amount, 100% of the entire amount, and whether and whether it should go to 100% or whether there should be a small percentage left, which would simply be for the issuance of the title so that there is a commitment on the part of the seller.
The Director of the Land Registry, Ellikos Ilias, explained that what is being attempted with this Bill is to amend the existing legislation and that the Special Execution Act applies, which he said should be the last measure to be taken in a sale and purchase process.
He said two new parameters are being introduced that further protect buyers, as the amendments achieve, "clean land" for development to take place, "without burdens that will be passed on to unsuspecting buyers", and also that money given by buyers for a particular development should not be given elsewhere by the land development professional. He added that it will not be easy to use it for other investment, noting that these are important elements and that it is no coincidence that it was put in the Recovery and Resilience Plan and he implored the House to pass it.
During the debate, Mr. Petrides, reacted strongly to suggestions by the representative of the Association of Land Development Entrepreneurs for changes to the proposal, which he said are necessary for overseas buyers and Cypriot buyers, "so that they are not intimidated." The Association's spokesman said they have prepared a "synergistic proposal" whereby the mortgage rate would depend on the co-ownership rate of now 20%, which he said fully covers the banks and also secures the buyer from the outset. They also asked, among other things, that the certificate of encumbrances should not include the filed contracts.
Petrides said he completely disagreed with the Association's positions, saying what they were asking for "is unacceptable" and noting that they had not gone to the Commission to re-consult with them.
Tornaritis said at the end of the session that they expect the text to be sent informally to the Commission where ministries can consult with representatives of each party on certain points.
Source: CNA
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