Today we discussed a quite important bill in the Legal, Justice and Public Order Committee of the House of Representatives. A bill that creates a mechanism to safeguard the interests of purchasers of real property by ensuring in advance that the transfer of real property will be executed promptly and as soon as the purchaser fulfills its contractual obligations.
Over the past 50 years 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 was very important to try to prevent this situation from happening again. The purpose is to protect the buyer so that the phenomenon of stranded buyers is eliminated before it occurs, meaning that new buyers are aware of the process that will provide them with legal certainty that by fulfilling their contractual obligations, the transfer of the property will take place, without hindrance.
In this direction, the draft law under discussion has been prepared, which has been subject to consultation with all parties involved and legislative and technical review and whose purpose is:
1) To ensure that the project is completed
2) The bank's mortgage will be eliminated
3) The buyer's interests with respect to issuing a title, without a mortgage, will be locked
How is this achieved?
- If the developer's project is mortgaged to the bank, the selling developer 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 seller developer's account.
- The Bank, with the developer's funds, the financing from the bank and the money from the sale, will ensure that the project will be completed
- The Bank will commit in writing to the buyer that by depositing the full amount, it will release the project from its mortgage.
- If the bank defaults on the commitments made, the Director of the Land Registry will intervene and release the property from the mortgage
This procedure is in line with good practices followed by other countries and is in accordance with a CBC Directive.
This is the only way to ensure that all of the buyer's money will be used for the project for which the buyer is paying his money and we will never again have phenomena of unfinished projects, as in the past, with the buyers/consumers themselves being the victims. This is exactly what they do in modern law countries.
As a reminder, the issue of transfer of titles to immovable property is a milestone in the Republic of Cyprus' Recovery and Resilience Plan (RAP) in the reform "Strategy to address inefficiencies in the title system".
I think there has been a good discussion today.Some technical issues were raised and there is a willingness on the part of the Ministries of Finance and Home Affairs to look at some of the details that were understandably raised by the MPs so that the Bill can be passed and we can meet the milestone of the Recovery Fund.
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