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		DEVELOPERS REMORTGAGING LAND
	Post: #1   Posted: Thu Aug 16, 2007 11:13 am SBS Joined: 13 Sep 2006 Posts: 980 Pictures: 0 Location: Frenaros   This should probably go in the Problems with your Developers Section but I thought it'd get better coverage here. I've just found out that our developers, Karayiannes, have re-mortgage the whole of our complex. (Ayios Sergios - Phase 1). I have never had any problems with Karayiannes in the past and hope not to have in the future and this is not a direct complaint against him but against the Cypriot legal system. I understand that this act of re-mortgaging by developers is common practice and done by most, it's just that you never find out about it. We have found out because one of our neighbours has sold their house and the new buyers are seeking a mortgage on the house. It came to light that Karayiannes has taken out a short-term mortgage on the whole of the land to fund his next development (supposedly 2 years). The new buyer has had some problems with the mortgage but now everything has been sorted out and Karayiannes has had to 'sign off' that house and presumably re-mortgaged something else for that share of the mortgage he has lost. This also explains why one house on our complex has been up for sale and lost 3 buyers because it already has a mortgage on it and presumably the prospective buyers have wanted mortgages and their solicitors have told them 'not to touch it'. This is not a direct complaint against Karayiannes but about the Cypriot system. How can this be allowed to go on? More to the point, how can they be allowed to do it without you knowing when you have the 'registered title' with the Land Registry. What happens if a developer goes bankrupt before the mortgage has been paid off, where do we stand? This also explains why it takes so long for the developers to apply for title deeds because they need the land to re-mortgage on. Anyway, I just thought people should be aware of the situation in that it is a common thing and probably going without them knowing. I have no intention of selling my house within 2-3 years, unless something unforeseen happens, so hopefully I won't have a problem and the mortgage will be paid off but it does make one wonder what else may be going on that we don't know about and whether your house is legally yours or will ever be! I'll also put this posting on the Legal Questions to see what Louise has to say about it. SBS

	Post: #2   Posted: Thu Aug 16, 2007 3:21 pm rogham1 Joined: 06 Sep 2005 Posts: 280 Pictures: 2 Location: Isle of Sheppey and Kapparis   I find this worrying and it also explains how some developers can finance their next development. We've often wondered where they got the funds from. Jennie

		Re: DEVELOPERS REMORTGAGING LAND
	Post: #3   Posted: Thu Aug 16, 2007 4:15 pm pantheman Forum Sponsor Joined: 27 May 2006 Posts: 2300 Pictures: 0 Location: Avgorou   SBS wrote: This should probably go in the Problems with your Developers Section but I thought it'd get better coverage here. I've just found out that our developers, Karayiannes, have re-mortgage the whole of our complex. (Ayios Sergios - Phase 1). I have never had any problems with Karayiannes in the past and hope not to have in the future and this is not a direct complaint against him but against the Cypriot legal system. I understand that this act of re-mortgaging by developers is common practice and done by most, it's just that you never find out about it. We have found out because one of our neighbours has sold their house and the new buyers are seeking a mortgage on the house. It came to light that Karayiannes has taken out a short-term mortgage on the whole of the land to fund his next development (supposedly 2 years). The new buyer has had some problems with the mortgage but now everything has been sorted out and Karayiannes has had to 'sign off' that house and presumably re-mortgaged something else for that share of the mortgage he has lost. This also explains why one house on our complex has been up for sale and lost 3 buyers because it already has a mortgage on it and presumably the prospective buyers have wanted mortgages and their solicitors have told them 'not to touch it'. This is not a direct complaint against Karayiannes but about the Cypriot system. How can this be allowed to go on? More to the point, how can they be allowed to do it without you knowing when you have the 'registered title' with the Land Registry. What happens if a developer goes bankrupt before the mortgage has been paid off, where do we stand? This also explains why it takes so long for the developers to apply for title deeds because they need the land to re-mortgage on. Anyway, I just thought people should be aware of the situation in that it is a common thing and probably going without them knowing. I have no intention of selling my house within 2-3 years, unless something unforeseen happens, so hopefully I won't have a problem and the mortgage will be paid off but it does make one wonder what else may be going on that we don't know about and whether your house is legally yours or will ever be! I'll also put this posting on the Legal Questions to see what Louise has to say about it. SBS This question has been covered by louise in the legal section, basically if he were to default, the bank would own the land and all the persons with property on it would have to pay it if they wanted their title deeds. Agree it is a sh#t system, but i thought it was illegal to take out a mortgage retrospective of selling the properties on it. Perhaps someone could correct me on this. sorry to hear about you r problem

	Post: #4   Posted: Thu Aug 16, 2007 6:02 pm Tina Torment Joined: 30 Aug 2005 Posts: 2495 Pictures: 0   As posted on the Tresfanou Golf thread, we found out our developers had mortgaged our plot......mind you, we were duped by them anyway! Sorry if this sounds confusing, reading the other thread might help? _________________ Tina Torment ------------------------- If you can't convince them, confuse them! (Harry S. Trueman)

	Post: #5   Posted: Mon Aug 20, 2007 5:03 pm fredrick Joined: 18 Apr 2007 Posts: 13 Pictures: 0 Location: Frenaros   I have no idea how the system of remortgaging is carried out or the legality of it but I have recently sold my Karayiannis house to a buyer who needed a short term mortgage. There have been a few delays caused by officialdom, red tape and new procedures introduced by Land Registry etc. but these problems have now been sorted. The developer completed the necessary release and paperwork that was required and I have to say I have always found Marios to be helpful and approachable. As far as I am concerned Karayiannis & Son is one of the better developers here. We have been delighted with our house and love it but are returning to the U.K. for many other reasons - if only we could take our house with us!!!

		KARAYIANNES
	Post: #6   Posted: Mon Aug 20, 2007 5:42 pm SBS Joined: 13 Sep 2006 Posts: 980 Pictures: 0 Location: Frenaros   As per Fredrick's entry and my original entry, I re-iterate I have NO PROBLEMS WHATSOEVER with Marios or any members of staff at Karayiannes, my criticism is solely with the Cyprus Legal System. SBS

	Post: #7   Posted: Mon Aug 20, 2007 7:15 pm nhowarth Forum Moderator Joined: 30 Aug 2005 Posts: 1796 Pictures: 4 Location: Erimi, Limassol   Hi SBS, There are a number of mortgage-related problems. Some weeks back I met with Lazaros Savvides, the Permanent Secretary of the Ministry of Interior. Draft legislation is in the pipeline, but whether it survives the political process and actually becomes law is another matter - particularly with the elections coming up soon. The politicians eyes will be on another ball. Regards, _________________ Nigel Howarth

	Post: #8   Posted: Thu Oct 11, 2007 1:08 pm nhowarth Forum Moderator Joined: 30 Aug 2005 Posts: 1796 Pictures: 4 Location: Erimi, Limassol   Just a quick update on the mortgage situation: Law reform hopes to clear up title deeds trap By Alexia Saoulli (Cyprus Mail, September 22, 2007) NEW HOMEOWNERS will have greater property security if an amendment that allows their contract of sale priority over developers’ mortgages is approved. The issue was brought up for discussion at the House Legal Affairs Committee on Thursday and is backed by the Lands and Survey department. By law, in order for a person to legally own property in Cyprus, he or she must have the title deeds to the property. However there have been instances where developers have delayed the transfer of title deeds to their clients for over 10 years, a phenomenon that has caused much frustration among foreign buyers looking to settle on the island. A property under development is initially registered with the Lands and Survey department as a whole part of land. Only when the land is developed and separated into houses or flats upon its completion is each one allotted a separate title deed. Within two months of purchasing a property from a developer, a buyer must deposit a signed and stamped copy of the contract of sale with the Lands and Survey department. By doing this, the buyer is able to take legal action against any developer that refuses to transfer the title deeds to him or her. The courts will then instruct the developer (the seller) to transfer the title deeds to the purchaser. The problem lay in the fact that the seller was not sufficiently protected under the existing law, first Land Officer, Haris Mardas, told the committee. At present developers’ mortgages take priority over the deposit of the contract of sale. In other words any seller who has taken out a mortgage on the land slated for development has precedence over the buyer. “Therefore the seller who has mortgaged the property and sold it to buyers of flats or houses they’ve built has priority,” he said. In order to do away with this problem the Lands and Survey department is suggesting amending the law so that the contract of sale will have priority over any mortgage. The contract will also have to have a bank’s written consent, he said. The reason the bank’s consent is necessary is because where a development company goes bankrupt, the bank puts up the land for public auction to make back its money. Any money left over goes to the buyers. However if the law were changed, the proceeds from the public auction would first go to the buyers and any profits left over to the bank. “In other words banks would have to start being very careful about what developers they give mortgages to,” a financial source told the Cyprus Mail. Another issue brought up at the House Committee was that sellers (developers) hold the title deeds as a trustee on condition that the buyer fulfils his obligations, thus protecting the buyer. At present although the seller is obliged to transfer the title deeds to the buyer, the existing mortgage makes the transfer impossible to be carried out. DISY deputy and House Legal Affairs Committee chairman Ionas Nicolaou said he was also planning to suggest amending the law so that by submitting the contract of sale with the Lands and Survey department, buyers had the same ownership rights as if they had already received the title deeds. “This is so that they feel more secure and so that they don’t have to wait for the title deeds to be issued,” he said. He added: “In every other European country a contract of sale is tantamount to ownership. In Cyprus you need to have the title deeds so that someone doesn’t sell it elsewhere.” What Nicolaou meant was that where a buyer failed to deposit a contract of sale with the Lands and Survey department, the developer could sell the property to a third party. “The first buyer would then be compensated for the property by the developer but that would be of little consolation if it was bought 10 years ago because he or she would receive a lot less than what it was valued for today,” he said. Nicolaou said the Lands and Survey department had been given a month within which to submit its suggestions and from then the committee hoped to begin drawing up the bill. Copyright © Cyprus Mail 2007 However, this is only part of the problem. Take a close look at the penultimate paragraph at Links only visible to Registered Members Register for Free or Login to the forum. It says: The deposit of the contract of sale creates an encumbrance, which expires within six months from the date of the contract of sale or six months from the last date of transfer specified therein. Where only part of the property is sold (a building site or field under division or flat, office or shop under construction) the encumbrance is attached to the whole of the immovable property until the issue of a separate title for the part so sold. This means that the encumbrance created shall thereafter be limited to the part of the property so sold. Until the issue of a separate title, the vendor may transfer his property subject to the contract of sale, which is deemed to be a mortgage on the property so transferred, in the name of the new owner (purchaser). The contract of sale is binding upon the purchaser. The vendor may also choose to mortgage the property. In this case, the contract of sale is deemed to be a prior mortgage (subsisting before the new mortgage). Regards, _________________ Nigel Howarth

	Post: #9   Posted: Thu Oct 11, 2007 3:18 pm DAC Joined: 02 Feb 2006 Posts: 4507 Pictures: 19 Location: Lincolnshire   Hi, There is probably to much information their for me to understand, here are a few simple questions about our part mortgaged apartment, that hopefuly someone may be able to answer, we have owned it for 2 years from new. Q1. Do We legaly own our apartment? Q2. Can it be taken from us by a bank? Q3. If the developer has a mortgage, can he make any claim against our property before we get our title deeds? Q4. Can we sell it without our title deeds? The Cypriot system seams so bent and open to corruption, it would be a nightmare if something went wrong. DAC

	Post: #10   Posted: Thu Oct 11, 2007 9:58 pm Steve - SJD Site Admin Joined: 16 Jul 2005 Posts: 9096 Pictures: 46 Location: Vrysoulles   Nigel, That sounds like a step in the right direction though I guess we'll have to wait to see how quickly they do this. I am guessing that this won't be retrospective though - what are your thoughts? DAC, Just to answer some of your questions: Q1. Do We legaly own our apartment? Not until you have the Title Deeds. Q2. Can it be taken from us by a bank? If the developer has remortgaged the land and they default/go bankrupt etc then the bank would have first charge on the land. This would obviously create difficulties as they would want to recover any monies. Q3. If the developer has a mortgage, can he make any claim against our property before we get our title deeds? Not sure what you mean? Q4. Can we sell it without our title deeds? Yes - though you would have to ask the developer to cancel your contract and create a new one for the buyer - they will charge for this - sometimes a lot unless a cap has been placed in your contract. HTH Cheers Steve

	Post: #11   Posted: Fri Oct 12, 2007 8:37 am DAC Joined: 02 Feb 2006 Posts: 4507 Pictures: 19 Location: Lincolnshire   Hi Steve, Quote: Q3. If the developer has a mortgage, can he make any claim against our property before we get our title deeds? Not sure what you mean? Sorry Steve, what I mean is, if the Developer still legaly owns the land, and has a mortgage on it, could the developer reclaim the property if he falls into finacial dire straits? DAC

		DEVELOPERS REMORTGAGING LAND
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