A Cyprus lawyer has been ordered by judges to pay €120,000 compensation to a British couple after his negligence meant they lost money on buying their dream property on the Mediterranean island.
The landmark ruling in the Supreme Court of Cyprus could result in a flood of similar claims as it has set a precedent and overcome the reluctance of lawyers to act against their own profession.
The British couple sold their property in the UK in 1999 to move to move to Cyprus to build their dream home. They bought land in Kinsousa village in Paphos from a contractor who agreed to build them a three bedroom villa.
They engaged Paphos lawyer Nicos Papakleovoulou to draw up and advise on property contracts. It later transpired that the property had been mortgaged twice, an interest had been registered on the property, while the contractor went bankrupt. The couple lost all the money they had invested in the property and the chances of getting any back from the contractor was minimal.
They decided to sue their lawyer for negligence in the Paphos district court and lost. They appealed to the Supreme Court, which has now ruled in their favour.
The court decided that lawyers do not have immunity and should be judged on the level of care and skill expected from the average professional. ‘In the case of purchasing land, the ultimate aim is to secure, either immediately or in a time agreed upon, the Title Deeds,’ the ruling said.
The judges decided that Papakleovoulou had not met his duties and was guilty of professional negligence.
Meanwhile a damning report has warned that the Cyprus property market faces a similar fate to the real estate market in Spain and the financial problems in Greece could make it even worse.
There is a serious stock overhang along with weakening occupational and investment demand, according to a report from analysts at Toscafund Asset Management. ‘We are convinced the Cyprus property market faces further downward price adjustments on top of those already recorded,’ said Savvas Savouri, partner and chief economist.
‘Spain’s ongoing problems should be seen as a warning of what awaits Cyprus. Whilst the investment outlook for vacation and retirement related real estate is a worry across all of continental Europe, in the Cypriot market participants do not seem to have awoken to the threats,’ he said in the report.
‘Whilst we hold concerns for vacation and retirement real estate across all of Europe, for Cyprus our alarm is heightened by the pervasive influence of Greek banks. Their arrival was of course at first favourable, bringing as they did capital that made its way into the property sector. However, their involvement when Greece itself is facing serious economic challenges risks making a bad situation worse,’ he explained.
‘As Greek banks become ever more distressed from their domestic and Balkan-wide loans, Cyprus will be unable to avoid being sucked of liquidity. From already depressed levels Cyprus faces downward property price corrections,’ he added.