Legal lifeline for property buyers.

[Cornholio]

Legal lifeline for property buyers
By Charles Charalambous
Published on October 31, 2010

Buyers can challenge purchases affected by developers’ mortgages.

THOUSANDS of buyers of property in Cyprus facing the threat of a bank chasing them for someone else’s spiralling debt ,or for repossessing property for which they have paid in full, can fight back using a little-known consumer protection law, and in the process radically transform the whole property market.

Under a 2005 European Union directive on consumer protection that became Cyprus law in 2007, property buyers whose purchase was encumbered by a developer’s mortgage or other charge without their knowledge, can make a claim for misselling. If upheld, that claim would see the original purchase agreement declared void.

The Unfair Commercial Practices Directive 29/2005/EC, which was introduced into Cyprus law as Law 103(I)/2007 on July 18, 2007, states that it is a violation for a business to omit or hide material facts from buyers, which if had been made known, would have influenced the buyer’s purchasing decision.

A question to the European Commission tabled in the European Parliament (EP) last week by British MEP Daniel Hannan says that “it is clearly a material fact that the property being purchased has a developer’s mortgage on it, and that in the event of the developer being forced into liquidation, buyers could potentially lose their homes. This fact is systematically hidden from potential buyers by developers.”

The EP question continues: “Cypriot banks even grant mortgages to buyers without informing them that the developer may also have a prior mortgage of his own on the property.”

The property market in Cyprus, which practically stagnated when the economic crisis hit home, has noticeably failed to recover in areas such as Paphos that have previously relied on British nationals buying holiday or retirement homes.

A major factor in this absence of recovery is a growing awareness of the long-standing legal and bureaucratic mess surrounding the issuing of title deeds, compounded by an increasing number of reports of sharp practice by developers, lawyers, estate agents and banks.

The British High Commission in Cyprus and a number of British MPs have been inundated with complaints from British nationals relating to the purchase of property in Cyprus. The current UK government is aware of these problems, and recently recommended to the Office of Fair Trading (OFT) that it investigates the question of misselling in relation to EU directive 29/2005/EC.

Some of the larger developers regularly market their services in the UK at foreign property fairs, either directly or through agents, so the OFT would be able to take action against anyone found to be breaking the law.

The body named in Cyprus Law 103(I)/2007 as the competent authority for not only enforcing the law’s provisions, but also to actively take steps to change the prevailing attitudes that result in misselling and other unfair commercial practices, is the Commerce Ministry’s Competition and Consumer Protection Service (CCPS).

Legal lifeline for property buyers - Cyprus Mail

 

[Force123]

Hi,

Does anyone know how you go about checking whether the developer may have also had a prior mortgage of his own on the property after purchase?

Thanks,
Force123

 

[Cornholio]

Update............

Title deeds fight heads to Europe
Published on April 17, 2011

FED-UP property buyers have decided to change tack and pursue their title deeds through Brussels, arguing that the holding back of the deeds violates the EU directive on unfair commercial practices.

The Sunday Mail has seen copies of letters which are being sent to the EU Commission and also to British Prime Minister David Cameron from UK MEPs, which they and the Cyprus Property Action Group (CPAG) hope could prompt some action.

It is expected that most or all of the 72 MEPs will sign the letters which are part of a coordinated plan, said CPAG’s Denis O’Hare, who believes the move could be a “title-deeds game-changer”.

“EU Directive 2005/29/EC - Unfair Commercial Practices was transposed into Cypriot law via 103 (I) /2007, effective December 2007 with the Commerce Ministry as the enforcement agency, yet was never properly promoted publicly as required under the Directive,” said O’Hare. “Lawyers we have talked to had not even heard about it.”

O’Hare said that currently the English-language version of the Commerce Ministry’s website contains no reference to the Directive “nor does the consumer protection legislation section of the Cyprus Consumers’ Association website”.

According to O’Hare, the role of the Competition and Consumer Protection Service (CCPS) has also been kept under wraps. He said EU documents show that: ‘Where the Competition and Consumer Protection Service of the Ministry of Commerce, Industry and Tourism, upon an investigation, considers that there is a violation, it may - if it deems necessary - apply to the District Court for the issue of a prohibitory or mandatory order, including the interim order, against any person who, according to the Court's opinion is liable for this violation.’

O’Hare said this suggests that the CCPS would take any court action on behalf of complainants. “To the tens of thousands without title deeds and whose homes are at risk due to developer mortgages, the withholding of their deeds would seem the most unfair commercial practice of all,” he said.

It is believed that well over 100,000 home buyers are without title deeds, one third of them foreigners. “Moreover, this grossly unfair practice also gives rise to other unfair practices by developers, such as cancellation charges, IPT and other scams,” O’Hare added.

An official at the CCPS told the Sunday Mail that she was aware of the Directive and said campaigns had been launched in the past to inform the public. Petros Markou, the head of the Cyprus Consumers' Association said he had never heard of the Directive but would look into it.

The MEP letter to the Commission, coordinated by MEP Daniel Hannan, requests confirmation that the developer practice of not transferring deeds infringes this Directive, regardless of when the property was purchased, referring to the clause ‘unfair practices occurring before, during and after a commercial transaction’.

The letter concludes: ‘Finally, we strongly urge the Commission to recommend that the withholding of title deeds or legal ownership of immovable property after purchase be added to Annex 1 of Directive 2005/29/EC, which lists 31 "Commercial practices which are in all circumstances considered unfair".

The letter to David Cameron calls for the investigation of the selling practices of Cypriot developers and their agents and the taking of appropriate measures, under UK law.

It is understood that a new CPAG website will be going live in the near future which will, among other things, give instructions on how to complain to the CCPS. O’Hare said: “Given the nature and size of the problem it is difficult to see how the CCPS will cope, however this itself will give grounds for complaint to the EU about the failure of Cyprus to enforce the Directive - our MEP powerbase will then push for EU action to be taken.

“Finally, should buyers not obtain satisfaction through the CCPS it could be that having exhausted this designated local legal remedy, they will also be at liberty, in their droves, to use the European Court of Human Rights, which is also free,” O’Hare added.

Title deeds fight heads to Europe - Cyprus Mail

 

[Cornholio]

Update............

Property buyers plan flood of complaints
Published on May 10, 2011

THOUSANDS of disgruntled property buyers without title deeds plan to flood the Commerce Ministry’s Consumer Protection Service (CPS) with complaints under the Unfair Commercial Practices law.

According to Denis O’Hare from the Cyprus Property Action Group (CPAG),the buyers plan to demand en masse that their title deeds be immediately issued or they receive their money back with interest.

The claims will be filed in accordance with the EU Unfair Commercial Practices law, which is now effective in Cyprus. However knowledge of this law does not appear to be widespread. Two weeks ago the head of the Cyprus Consumers Association, Petros Markou, told the Cyprus Mail that he had never even heard of it.

The new joint action by property buyers is being organised by CPAG as just one part of a co-ordinated exercise involving UK MEPS at the EU, in order to force the government to act on the issue of withheld title deeds, a practice which is damaging to the island’s property market and image.

"The government of Cyprus in response to previous lobbying of the EU by CPAG’s supporters was forcibly pushed into action declaring to all and sundry that legislation would be passed to fix the problem for buyers. However, after originally promising this legislation by the end of 2008, only recently did the Minister of the Interior boast that he had finally cut the Gordian Knot, his oft-used phrase for this mess, by getting certain bills passed by parliament,” said CPAG’s O’Hare. “Unfortunately it is now clear that passed legislation, which was mostly designed to try and clear the festering illegality in the industry caused by the abject failure of this and previous governments to enforce the nation’s planning laws, does not address the main problem of undisclosed developer mortgages encumbering people’s homes.”

He said they would now turn to the Consumer Protection Service, the agency which enforces the EU Directive Unfair Commercial Practices law, among others, and is also tasked with taking court action on behalf of complainants if required. It also has powers to hand out heavy fines to transgressors and jail sentences can be used against persons who hinder their investigations.

CPAG has co-ordinated via UK MEP, Daniel Hannan, that most if not all of the 72 UK MEPs co-sign a letter to Vivian Reding, EC Commissioner for Justice, requesting that the failure to transfer title deeds immediately after purchase be deemed an unfair commercial practice in all circumstances, regardless of when the sales contract was signed.

O’Hare said that many CPAG supporters had also written to Reding with a similar request and confirmed that buyers of other nationalities are now writing to their country’s MEPs to seek support to outlaw this title deed practice.

Asked if he really thought that the Consumer Protection Service would be able to obtain buyers’ deeds or get their money returned O’Hare said: “In a word, no! But this in itself will establish that Cyprus cannot or will not enforce EU law and this means that the EU Commission will be forced to take action against Cyprus, according to our MEPs.”

Furthermore, having exhausted the local legal remedy individual buyers can use the European Court of Human Rights, which is also free, in order to press for their property rights. Under an EU Directive the state is responsible for any losses caused by non-enforcement of the law.

Property buyers plan flood of complaints - Cyprus Mail