UPDATE : January 2013 – Cyprus Bailout Conditions – EU Commission
CPAG was established in May 2007 in order to address the concerns of the many property buyers without legal ownership of properties bought and paid for in good faith, often many years previously. Whilst in this precarious position the buyers were also subject to financial and other exploitation by the dishonest developer fraternity, in league with the army of equally dishonest lawyers. Moreover, we also soon discovered the huge part the banks were playing in this disgraceful denial of buyers’ property rights.
Having first tried unsuccessfully to lobby the Government to clean up the unholy mess some years ago, we decided that only outside pressure from the EU could change the situation.
We did not underestimate the difficulty of lobbying the EU Commission nor the support we would need from MEPs within the EU Parliament. However, we have persevered with this approach as it was the only realistic option open to us given that the Government had little interest in finding a solution. We have also sent information to the Troika team working with Cyprus.
As a result of all this combined lobbying, at this moment in time, we are very optimistic that change may be inevitable for reasons we will cover in this update. In this regard, we would wish to thank our CPAG supporters, especially our UK MEPs, coordinated as needed by Daniel Hannan MEP and his team, also the British High Commission and not least Nigel Howarth of the Cyprus Property News for his ongoing support.
The draft Memo of Understanding between the Troika and Cyprus well and truly lays bare the fact that the precarious position of the banks in Cyprus is largely caused by their reckless lending in the property market and not just the exposure to Greek sovereign debt, something which has never been publicly admitted before (page 1 – in bold!):
“However, many of the problems for the sector are home-grown and relate to over expansion in the property market as consequence of banks’ poor risk management practices.”
Furthermore, the EU Commission has also apparently convinced the other members of the Troika, the International Monetary Fund (IMF) and the European Central Bank (ECB) of this fact and the impact it causes regarding failure to transfer title deeds to the rightful owners. Under section 5.4 on page 27:
“By [Q4-2014], eliminate the title deed issuance backlog to less than 2,000 cases of immovable property sales contracts with title deed issuance pending for more than one year. The authorities will enhance cooperation with the financial sector to ensure the swift clearing of encumbrances on title deeds to be transferred to purchasers of immovable property, and implement guaranteed timeframes for the issuance of building (completion?) certificates and title deeds;”
“Publish quarterly progress reviews of the issuance of building and planning permits, certificates, and title deeds, as well as title deed transfers and related mortgage operations throughout the duration of the programme;”
We can therefore now state with some certainty that the ‘outside pressure’ we have sought through our joint lobbying efforts can be brought to bear on the Government, on an ongoing basis over the next few years, in return for rescuing the Republic of Cyprus from certain financial ruin.
We also concede that currently Cyprus has apparently not yet accepted all the bailout conditions, however the ones highlighted above do not seem to be disputed.
Complaint -Non Enforcement of EU Law
Following on from our complaint in late 2011 covering the deliberate non-enforcement of the Unfair Commercial Practices Directive Law we have recently complained about Cyprus’s failure to enforce the Unfair Terms in Consumer Contracts Directive (UTCD). This law was transposed into Cyprus law (law 93(I) of 1996 on November 8th 1996.
It also states in the Directive “Whereas it is the responsibility of the Member States to ensure that contracts concluded with consumers do not contain unfair terms.”
Once again the Cyprus Consumer Protection Service or CCPS (surely an oxymoron!) is the enforcement agency for this law.
Indeed from a document previously sent to the EU Commission on behalf of Cyprus, covering Electronic Commerce, this law is mentioned and the fact that the Director of the CCPS can go to court if he/she thinks that a clause is unfair and the court can actually invalidate a contract as a result (page 11).
“A court may not re – balance the contractual rights and obligations of the parties, but has the power only to declare that the unfair clause is invalid, and/or that the contract is also invalid in case that it may not continue to exist without such restrictive clause.”
It should be noted that the specific complaints to the CCPS involved victims of the ROPUK/Alpha Panareti/Alpha Bank scam – something which John Fingleton, Chief Executive UK OFT, in a letter dated April 2012, has characterised as a fraud – “Much of the harm identified appears to have resulted from fraud”.
The complaints to the CCPS covered both the sales contracts and mortgage agreements and requested that these be declared invalid from the outset.
Ongoing EU Commission Investigations
We have tried to gain access to the communications between the EU and Cyprus regarding property matters under the EU provision allowing for this (Regulation 1049/2001). We must thank Sir Graham Watson MEP for his great persistence in supporting us in this quest.
Our aim in doing this was to ensure that the EU was not being misled by Cyprus and we have also offered to sign a confidentiality agreement in this regard. Unfortunately, despite jumping through the various hoops along the way, as you will see from the final decision of the Secretary General we have been denied this access.
Sir Graham has also written to the Cyprus Ambassador to the EU and received a detailed response which may demonstrate the possible ‘veracity’ of information being supplied to the EU. We have produced our own CPAG response to the points the Ambassador has made and have sent this to the unit at the Commission which is leading the investigation into Cyprus.
Furthermore, in the past we have also sent to this unit a list of questions the EU may wish to ask Cyprus in order to properly understand the scandalous property situation; such as the true number of properties encumbered by developer mortgages and the (true) total number of properties awaiting title deed transfer to buyers.
For example in September 2011 the Minister of the Interior was crowing about the 28,000 deeds issued since 2009. At which time (September 2009) he was saying that 130,000 title deeds were ensnared in the system. However, other data released in 2008 suggested that possibly 100,000 deeds were suffering this fate.
What is quite surprising then is that when a London-based Bloomberg journalist met with the Minister in December 2008 and asked (at CPAG’s request) relevant questions he was told that these figures would be provided by the lead civil servant (a person we have met several times). In February 2009, his email to the journalist states that 65,500 units have been registered with the Land Registries but do not have titles whereas later in that year (September) the Minister was saying that the figure was 130,000 – double the number!
It should also be noted that Minister Sylikiotis, now Commerce Minister, is responsible for the CCPS – and it follows, the non-enforcement of these relevant EU Directives.
It is because of incidents such as these that we requested to see the ‘responses’ from Cyprus to the EU in order to ensure that the Troika, amongst others, is not being led up the garden path.
EU Petitions Committee
We have also in our efforts to lobby support petitioned the Committee with individual cases, however in a recent response to a petitioner (who is also registered at the ECHR) it is clear that a different language is now being used by the Committee:
“The European Commission intends to continue its bilateral contacts with Cyprus in order to ensure the relevant authorities address the issue.
Should it receive confirmation that there is no real willingness to solve this problematic situation at national level, the European Commission envisages to take further actions, as appropriate, in order to protect the affected citizens and ensure compliance with EU law.”
We now have the EU Commission, including the Petitions Committee, the International Monetary Fund, the European Central Bank and the European Court of Human Rights involved in this matter; if they collectively cannot get this denial of property rights in Cyprus addressed it is difficult to see where else CPAG can lobby.
Our approach going forward will therefore be to concentrate on monitoring these activities and exerting pressure wherever we can, especially through the kind assistance of our supporting MEPs.
UPDATE : July 2012 – EU Commission – European Court of Human Rights
As the Cyprus economy and banking system approaches meltdown many buyers without legal title to their retirement homes must be very worried. Some unfortunate buyers have found out already by accident that their homes are scheduled to be sold off in order to pay off their bankrupt developer’s debts – not only to the banks but to the many other creditors, including the Inland Revenue, who have since come out of the woodwork and also lodged claims against the title deeds.
Currently the rating agency Standard and Poor estimate that the bailout package from the EU being negotiated will need to be in excess of €15 billion, with €6.5 billion required for the banking sector, mostly for recapitalisation. We are afraid that the rating agencies don’t know the half of it. And what chance that the Troika (EU Commission, IMF and European Central Bank) will be told the truth and isn’t the ex-Minister of the Interior, who has presided over this debacle for the past 6 years, part of the Cyprus negotiating team?
We at CPAG, through dealing with some terrible buyer situations, have seen much of this coming and quite some while ago turned our attention to the EU to lobby for outside intervention on behalf of buyers trapped in this highly corrupt property nightmare.
Furthermore, we have also now found a route through to the European Court of Human Rights for buyers in order for them to apply with a case against the state of Cyprus.
Thanks to the lobbying efforts of some of our supporters combined with a joint UK MEP letter to the Justice Commission organised by MEP Daniel Hannan’s staff in June 2011, CPAG became in close contact with the legal team of Commissioner Viviane Reding. We were able to supply them with much fact about the rogue property industry in Cyprus.
In August 2011 we also became involved, at the Commission’s request, with their consultants in Berlin who had been tasked with reviewing the implementation of the Unfair Commercial Practices Directive (UCPD) since its transposition into individual member states’ law in December 2007. We did the final review of the Cyprus input in November 2011 and understand that the review was delivered to the Commission in January 2012. The original Directive calls for this review which includes the ‘black list’ of practices which are unfair in all cases. CPAG, in line with the original lobbying, has continued to press that the practice of developers withholding title deeds (regardless of when the sales contract was signed) has far wider reaching consequences than any of the existing 31 unfair practices on the current black list. This practice is also the only one which can be quantified in terms of numbers.
In November 2011 we also made a formal complaint to the Commission about Cyprus’s deliberate failure to publicise or enforce the Unfair Commercial Practices law, which was accepted immediately. Even today, some seven months after the complaint, the Cyprus Consumers Association’s website still does not disclose any details of the UCPD.
MEP Daniel Hannan has recently asked these two questions in order to elicit the Commission’s current position on these matters.
Coincidentally, immediately following these questions, MEP Sir Graham Watson, who had previously on our behalf asked the Commission for CPAG to be given access to related correspondence between the Commission and Cyprus, received this reply .
The first part of the reply from Commissioner Reding covers correspondence between Cyprus and the Commission regarding Cyprus’s infringement of EU law. Following CPAG’s official complaint in November 2011 the pre-infringement procedure caters for the state in question to respond to the complaint. Depending on this response, which in this case has already been received by the Commission, the EU can decide whether it will take Cyprus to the European Court of Justice, something they are considering at the moment.
Ms. Reding does however helpfully inform CPAG on where to apply for these documents and we have already done this and received this response.
Ms. Reding also confirms that they will publish a communication in August regarding the review of the Directive, further stating that the EC services intend to continue their contacts with Cyprus to address “any problematic issue linked to the non-delivery of title deeds in Cyprus”.
Finally, notwithstanding that the Eurozone is currently deep in crisis, having been given much evidence, and especially noting the previous false promises of the Cypriot Government, we trust that the EU Commission will now do its duty in developing and enforcing EU law for the benefit of its citizens rather than contemplate any fudging to protect this corrupt state.
European Court of Human Rights
As noted in our formal complaint regarding the deliberate suppressing of knowledge of the UCPD or the enforcement agency, the Cyprus Consumer Protection Service (CCPS), we helped a group of buyers to complain to the CCPS which turned them all down on quite spurious grounds. This allowed us then to facilitate these buyers going to the ECHR having exhausted the local legal remedy. The group includes buyers from three different developers which have become bankrupt, but also contains buyers in other circumstances.
These examples of communications with the ECHR show firstly that this buyer’s case has been found admissible on the 1st of March 2012, however secondly the barrier which personnel at the ECHR tried to put in front of the applicant on the 12th of December 2011 regarding the original application dated 14th of November. CPAG have been supplying standard replies to these ‘challenges’ (please note the signatories) and to date none of the applicants we have assisted has been turned down. This particular case relates to a widow in her eighties who has been waiting over 20 years for Aristo developers to transfer title deeds, however they are in dispute with the co-owners of the land and don’t even have a Completion Certificate yet (required by criminal law before buyers move in). This co-ownership was not mentioned in the sales contract yet the Land Registry still lodged it.
Over the years, especially since the start of the property boom, in a scheme akin to organised crime, developers and banks, aided and abetted by the legions of dishonest lawyers and of course the many corrupt public officials, have abused the primitive land registry system in order to line their own pockets. Yet trusting buyers have been assured by the industry and even Government ministers that lodging their sales contract gave them ultimate protection. However, this lie has since been well and truly exposed as just that. In truth this supposed system of protection is the enabler for the exploitation of buyers as will be seen later.
At this stage we should examine what Article 26 of the Constitution states:
‘Every person has the right to enter freely into any contract subject to such conditions, limitations or restrictions as are laid down by the general principles of the law of contract. A law shall provide for the prevention of exploitation by persons who are commanding economic power.’
Now let’s look at what happens in practice. Firstly, in a partnership of deception a bank gives a developer a mortgage on a piece of land knowing full well that that developer will later, after the mortgage has been lodged against the land title deed, ‘sell on’ that land to a buyer (or buyers) without telling them of the mortgage and the inherent risks. Dishonest lawyers, in the knowledge that they are protected by the Cyprus Bar and judiciary, then act in a professionally negligently way towards their (paying) clients to facilitate the deception. They achieve this by not doing searches or informing buyers of this practice.
The buyer then through a sales agreement pays stage payments to build the fabric of the building, however under the current ‘system’ in Cyprus should the developer default on his mortgage on the land only the bank can apply to sell the land and house to cover the developer debt. Unfortunately, what is now becoming clear is that when a developer goes bust other creditors take legal action which results in claims against the developer assets e.g. properties he has not transferred to the rightful owners.
For example, a couple bought a piece of land in Anarita from developer Liasides for a price of €77k in April 2002, after employing the services of a Paphos lawyer, Nicos Papacleovoulou. In June that year a completely separate contract for the building of a bungalow was signed with Liasides Developers for €145k, to be paid in stage payments. This second contract was duly registered and the appropriate stamp duty paid with the stamps affixed to the contract.
Only in June 2007, did the buyers find out from their lawyer that the developer had a mortgage on the land with Alpha Bank for €60k which was lodged in February 2002. It transpires that the developer may have not made any repayments since that date yet the bank have taken no remedial action or written off the debt. It is thought that the debt has been gathering interest at 15% p.a. at least which is capitalised twice a year (added to the original loan) – interest upon interest, upon interest.
Note: the visiting Troika have discovered that banks have not been booking non-performing loans as NPL’s if they were still ‘secured’. Presumably the banks may have previously thought that developer mortgages were fully secured – however they are now just discovering that this is not the case!
Liasides have since gone into receivership and quite a few buyers have (by accident) discovered that Alpha Bank applied to the Land Registry in late 2011 to sell their homes. Some of these buyers have since written to Paphos Land Registry requesting that they do not give this permission. Their standard reply states that as there is a ‘pile of similar applications’ the scheduling of a public auction is not a matter to worry about in the near future!
We think this lack of action is part of a cover up for the recent discovery that the Land Registry system of lodging of contracts is even less secure than we thought it was, despite the disingenuous statements of Minister Sylikiotis on the matter over the years.
This buyer situation is now in the ECHR and as part of this we insisted that the applicants all obtained up to date N50 searches at the Land Registry – some shocking news was discovered. For example in this single property situation in 2008 three claims as a result of court cases by other creditors for a total of nearly €150k were lodged on the land title deed. These were all allocated an annual interest of 8%. In 2010 and 2011, there are also claims lodged in favour of the Inland Revenue for €160k, which also appear on other site deeds. Additionally, the unserviced developer mortgage must be well over €100k. (Note: These same buyers wrote to Interior Minister Sylikiotis and he assured them that lodging their sales contract protected their purchase).
On one of the other Liasides sites (20 properties) the N50 search in December 2011 ran to 22 pages, mostly all additional claims by various creditors!
However, the only claims which do not increase year on year are the buyers’ sales contracts so the longer this shambles goes on the more disadvantaged they become.
What is clear is that the land plus the property in this specific case cannot sustain all this registered debt and claims. In any case we argue in the ECHR cases that as the buyers were the only ones to pay for the fabric of the building (i.e. bricks and mortar plus fittings) through a separate and legally stamped contract how on earth is it just that their home can be used to service the developer’s other unrelated debts? And by the way, what claim does the bank now really have, even over the land, when it was part of a deception from the outset and has not acted properly in respect of the management of the developer’s debt on that land?
We showed these searches to an experienced property lawyer who was quite shocked and we asked him who would get what after the sale. He stated that as all these creditors, including the buyers, had legal claims then he assumed that they would all end up with a small proportion of their claim (including the now homeless buyers), but had never envisaged such a situation arising.
In another situation, Signature Lux developer, whose owner has since fled to the USA, has had its bank (Hellenic) apply to the Land Registry to sell mortgaged properties. Before making the final payment the buyers on one plot on which two properties were being built insisted that their lawyer (the President of the Cyprus Bar in Paphos District) find out whether was a mortgage on the site. He,Yiannis Papazacharia, then admitted that there was a mortgage. In 2008, they did a search themselves at the Land Registry to find that there were two mortgages but no value was given on the search. However, later they did a search through another lawyer and were shocked to find on this small plot of 978 sq metres that there was a mortgage for €196k taken before the two sales contracts were lodged and one after this for €100k. Naturally, if their original lawyer had warned them about the mortgage when they originally decide to buy they would not have gone ahead with the purchase.
These buyers also wrote to Minister Sylikiotis and received the usual false promises about the Land Registry.
Currently, there are the two unserviced mortgages (originally € 296k) shown on the title plus the two buyers’ sales contracts (€700k) plus other recent creditor claims totalling already, and without interest, some €462k. This means that there is possibly over €1.5million worth of claims on the plot on which the unfinished and illegal (no Completion Certificate) properties sit. These properties together are probably worth no more than €400k in today’s market which demonstrates the ridiculous and totally unsound system at the Land Registry.
Emerging Financial Implications
With regard to the review of the ‘black list’ of the Unfair Commercial Practices Directive to which CPAG was asked to give input by the Justice Commission, and was the subject of the joint MEP letter, we do hope that the Commission will do their duty and put this proposal to outlaw in the EU the withholding of legal title to property (regardless of when the contract was signed) before the EU Parliament vote.
We also hope that the ECHR will find in favour of buyers who have taken such cases to the Court. Furthermore, we hope the Court will rule on the unjust practices of banks and other creditors allowed by the primitive Turkish Ottoman land laws which are being used to exploit buyers who themselves have acted wholly legally and in good faith. We cannot believe the ECHR will find that such exploitation is in any way just or lawful and is also unconstitutional. Remember these cases are against the State of Cyprus itself and also sue for non-pecuniary damages (for stress suffered, etc).
Hopefully, with favourable outcomes the Government will be pushed into properly addressing the title deed scandal.
With a reported €6 billion worth of developer mortgages (who knows what the real figure is?) and developers currently in a collapsed market with limited income and unable to service this debt (and with the banks having hidden these NPL’s) this ‘toxic debt’ we have been highlighting for years becomes even more toxic every day. Unfortunately, we are now seeing a possible avalanche of other creditor claims against retained title deeds on properties paid for in full, often years ago. So where does this now leave the banks’ underlying collateral cover?
The fact that this additional creditor debt is now emerging apace means that even writing the bank debt off or taking this into a ‘bad loan’ bank still does not allow the issue of title deeds unless of course the now-bankrupt state can find a way to pay all these emerging creditors.
With respect to our complaint about Cyprus hiding the existence of the Unfair Practices law this has meant that since its (secret) transposition into local law in December 2007 developers, banks, lawyers and estate agents have habitually broken this law in not informing buyers of material fact i.e. the existence of developer mortgages, as required under this law. Clearly, if they had warned buyers then sales would have indeed been few and far between.
It is hard to believe that the decision to suppress knowledge of this law was made without conferring with the banks and influential developers.
We have informed the EU Justice Commission how to find out from the Land Registry how many buyers after December 2007 have been sold properties with developer mortgages on them. Moreover, many of these local buyers would have also used a mortgage of their own to purchase the property and the bank will not have informed them that the developer also had a mortgage and therefore the ‘material fact’ implications.
Two issues arise from this: Firstly, the UCPD states that “it is necessary that Member States lay down penalties for infringements of the provisions of this Directive and they must ensure that these are enforced. The penalties must be effective, proportionate and dissuasive”.
Under Cyprus Law 103(1)/2007, when the CCPS discovers a breach, it has the power to do various things, including an administrative fine of up to 5% of the turnover to the person responsible, or a fine of up to CY£150,000 (€256,290). Anyone who hinders the CCPS’s work is guilty of an offence punishable with a maximum fine of CY£50,000 (€85,430) or a 6-month prison sentence, or both.
We would expect the EU Commission to push for these fines to be levied which ought to be ‘dissuasive’. As an example of turnover, the largest bank has since the establishment of this law up to the present turned over around €12 billion.
Secondly, we would expect that the Commission will push for publicity of this law at last and that maybe the victims should be contacted. A legal agreement is effected by two or more parties acting in good faith. If one of the parties has broken the law in order to effect an agreement then that agreement is void as it was infected with illegality from the outset. Both the sales agreement and mortgage agreement stand to be voided in this situation and the victim to be returned to his or her previous financial position prior to the (illegal) agreement.
As many, especially Cypriots, will be having trouble making repayments due to the current crisis, this law could be a way out of sizeable mortgages – we hear that they can borrow up to 13 times their annual income. In any case if the bank tried to take legal action in the case of buyer default this law would give them an excellent defence.
Furthermore, since this law was transposed into Cypriot law, housing loans to individual buyers have grown from €8 billion to €15 billion – this is a lot of individual mortgages and many will have been granted on properties with developer mortgages without the buyers being informed of this material fact. We also have cases in the ECHR in this category.
We thank all those who continue to support our efforts especially those MEPs who are signed up to our cause. We are sorry this update was more than a little long but we hope you will agree that there was plenty of content to communicate.
UPDATE : December 2011 – Joint MEP Letter – EU Response
This is a brief update and we will shortly be issuing a more comprehensive one including our recent dealings with the EU Commission on a series of matters.
In June this year, 42 UK MEPs signed a letter addressed to Viviane Reding, Vice President of the European Commission, regarding the practice of Cypriot developers withholding buyers’ title deeds and whether this was an unfair practice and against EU law. Sixty of the UK MEPs actually pledged their support. This was organised by Daniel Hannan MEP in co-ordination with CPAG and with many of our supporters also writing individually to Ms Reding as part of the same action plan.
We would like to thank all these MEPs and our supporters who played a part in this important exercise.
The response from Ms Reding dated 5th of December is attached for your perusal.
Following the joint MEP letter, the EU Justice Commission team had involved CPAG in August with their UCPD consultants, Civic Consulting based in West Berlin, in contributing to the UCPD report and suggestions for changes to the Directive mentioned in Ms Reding’s response. To say these people were shocked to hear what was going on in Cyprus would be an understatement.
After the report is published it is probable that draft legal changes will be developed by the Commission and these will be voted on by the EU Parliament. At this stage we are fairly confident that the practice of withholding title deeds could be at last outlawed under EU law.
Please see this article in the Cyprus Mail – EU demands answers on title deeds
UPDATE : June 2011 – Unfair Commercial Practices Directive
Complaints to CCPS
Since our update informing our supporters of the role of the Cyprus Consumer Protection Service (CCPS) and how to complain under the provisions of the Unfair Commercial Practices Directive quite a number of buyers have applied and duly informed us of this.
Virtually all the complaints which have received a response have been turned down on the basis that the sales contracts were signed before the law became effective in Cyprus. This despite a reasoned argument covered in the complaint itself to the effect that this excuse is invalid, i.e. that the law covers unfair practices ‘before, during and after a contractual relationship’.
When asked in a supplementary question where in the Directive it stated that it only applied to contracts signed after the law came into force the CCPS omitted to respond in their reply!
We believe the CCPS’s standard response is akin to saying that the Government is going to implement a speeding law but it only applies to cars purchased after this law became effective!
Nevertheless, this stance is most welcome as we now believe that with this response from the CCPS, which is the EU designated local legal remedy, complainants are now free to take their cases to the European Court of Human Rights ( EHCR).
Furthermore, some of our worst case scenario buyers have also received this formal response from the CCPS which should enable them to take Cyprus to the EHCR for failure to protect their property rights. Once in court we would expect that the full spectrum of the failings of the State to protect buyers can at last be properly examined by independent judiciary. CPAG will assist these buyers with their EHCR applications and any others who have complained to the CCPS by 30th June 2011 and duly notified us of this.
Note: Complainants have a 6 month window to make their case to the EHCR from the time of the decision of the local legal remedy (CCPS). As the first of our supporters received a response on the 19th May the clock has already started ticking!
Nevertheless, it is clear that a positive reply from the EU Commission to the MEPs’ request to outlaw the withholding of title deeds (see below) would create significant precedent for these EHCR cases and that we should bide our time for the response to the MEP request.
With regards to the MEP jointly-signed letters to EU Justice Minister and David Cameron (plus William Hague, Vince Cable and the Head of the UK Office of Fair Trading) the logistics of MEPs physically signing these letters has been a challenge, as they say.
Since we first wrote to MEPs in early April we have been gradually garnering support amongst them and on the 17th June with the clock ticking it was decided that the initial letters should go out containing the first 42 signatures which were already in place.
At this time out of a total of 72 UK MEPs, 60 MEPs had already pledged their support and their agreement to sign the letters. This included all the heads of delegation (party groupings) so there is comprehensive all-party support. In addition the UK has two out of the 14 EU vice presidents and both these (Diane Wallis and Edward McMillan-Scott) gave their support. Others have also promised to more actively support UK buyers within the EU.
Furthermore, we now have good representation on the important committees – Petitions, Legal Affairs and on the Internal Market and Consumer Protection Committee which is chaired by Malcolm Harbour MEP, one of our signatories.
Finally, CPAG are most grateful to these MEPs, to our supporters who lobbied their MEPs and especially to the team of Daniel Hannan MEP which co-ordinated this unique effort within the EU Parliament.
EU Justice Commission
Many of our supporters wrote to the Justice Commissioner, Mrs Viviane Reding, regarding the unfair practice of withholding Title Deeds by developers and the other unfair and aggressive practices emanating from this. We are most grateful for your efforts.
Prior to this, in our frustration with, as we saw it, the Justice Commission’s unhelpful responses to legitimate MEP questions, CPAG had also complained to the EU Ombudsman.
However, we are now happy to report that since May 18th CPAG is in direct communication with the Justice Commission and is supplying relevant information with regard to the unfair practices perpetrated against buyers in Cyprus and the shortcomings of the State regarding the enforcement of the Directive.
A recent response by Mrs Reding to a question from David Martin MEP also contained the following :
“The Unfair Commercial Practices Directive (“the Directive”) protects consumers against misleading and aggressive commercial practices by traders, including traders marketing real estate to consumers. The Directive has been transposed in Cyprus by the Law on the Unfair Commercial Practices from Businesses to Consumers of 18 July 2007. It is for the national authorities and courts to ensure that the provisions of the law transposing the Directive are properly enforced. Infringement proceedings against a Member State for inadequate enforcement of the Directive could only be considered if there is evidence of a systemic failure to enforce its provisions, which deprives consumers of adequate and effective means of redress against unfair commercial practices.
The Commission has been made aware of certain problems related to the sale of real estate in Cyprus. Thus, the Commission has decided to contact the relevant authorities in order to investigate this matter more closely.”
We trust that ultimately the EU Justice Commission will make the right decisions on behalf of justice for buyers in Cyprus.
This much vaunted legislation was originally passed off to all and sundry as a solution to the title deed problem when in truth it is merely a cover-up for the failings of this and previous governments to enforce the planning and consumer protection laws. In some respects the perpetrators are being let off the hook and the problems being passed on to their original victim buyers.
Some buyers who are currently occupying illegal buildings may be able to derive some benefit from the amnesty legislation, however the question is – at what additional costs?
Please see this excellent article for more detail.
In addition, provisions in the law call for ‘tainted title deeds’ where a buyer may receive a deed on which it is noted that the property cannot be sold or mortgaged making it immediately unsaleable and therefore worthless – consumer protection Cyprus style!
The government have admitted that they do not know how many properties are affected by these illegalities, so have no idea of the possible effectiveness of this amnesty. What we do know however is that the new laws do nothing to address the main problems for buyers i.e. developer mortgages on their homes.
You may recall that this legislation was a ‘kneejerk’ reaction to previous lobbying of the EU by CPAG supporters.
UPDATE : May 2011 – Complaining to the CPS
We have updated the CCPS part of the website with some templates which buyers without Title Deeds can use to complain to the Consumer Protection Service. Other templates will be added as we develop them.
We urge you as individuals to make a complaint in order to support our joint efforts to change the ludicrous system of buying new property in Cyprus.
Not that we expect the CCPS to be able to deliver Title Deeds, but until we have the evidence of non-enforcement of EU law by Cyprus can we escalate this matter to the EU Commission for them to take action against Cyprus.
In order to help us monitor this activity please also complete the form provided to let us know when you complained and the response you received.
To our supporters whose developers have gone into liquidation already and are at the risk of losing their homes please rest assured that you remain our number one priority and we continue to investigate ways of helping you.
After all, you did everything properly and legally, paid for the property, used a lawyer who was a member of the Cyprus Bar and were assured that Cyprus was a safe country in which to buy property. Furthermore, you lodged your sales contract in the Land Registry (and paid for this service) on the understanding that this would afford complete protection regarding the purchase – as has been assured repeatedly by the Minister of the Interior, amongst others.
UPDATE : April 2011 – Lobbying the EU Commission
Purpose of this Communication
This is a vitally important request for your action.
We are calling for your individual action in order to support CPAG, your UK MEPs and especially all buyers without Title Deeds. Please read the full text below and the request to you at the conclusion of this note.
In April last year it was decided to close down the CPAG website due to the severe risks to people involved in running the website. Nevertheless it is also fair to say that at the time we were also being overwhelmed with emails from distressed buyers.
Although we continued to help these buyers wherever we could it was also obvious that in the case of developer bankruptcy there was little that we could ultimately do.
By this juncture, although under severe pressure as a result of our supporters’ lobbying of the EU and UK Government, it was clear that the property industry and Government of the Republic of Cyprus had few options and even fewer ideas on how to get out of the scandalous mess surrounding Title Deeds.
It was therefore decided that, as change could only really come as a result of outside pressure, CPAG’s efforts would have to be concentrated on the EU. This we have done and as a result we are more optimistic than ever that change is now possible.
As you will see from the MEP letter (below) to the EU Commission, we now believe that not handing over Title Deeds immediately the full purchase price has been paid is an infringement of EU law.
EU Directive – Unfair Commercial Practices
The Unfair Commercial Practices Directive was transposed into Cyprus law effective December 12th 2007 and makes the State responsible for the enforcement. Also the European Court of Human Rights has previously ruled that member states could be liable to pay damages to individuals and companies who had been adversely affected by the non-implementation of a directive.
This particular Directive under Article 17 called for EU member states to ‘take appropriate measures to inform consumers of the national law transposing the Directive and shall, where appropriate encourage traders and code owners to inform consumers of their codes of conduct’.
In truth the Cyprus Government appear to have implemented and publicised this law in a fashion which means that the least number of consumers know about it. For example there do not appear to have been any media announcements to inform consumers and the Cyprus Consumers’ Association website itself contains no reference to the law, even though it claims to carry all consumer-related legislation.
Lawyers we have contacted were unaware of this law and we have even seen a recent communication from a member of the Board of the Cyprus Bar stating that is he is not familiar with the Cyprus law which transposed this Directive. This could also mean that lawyers have unknowingly fallen foul of this law since it was transposed!
The Ministry of Commerce is designated as the Enforcement Agency for this law. A visit to their website will show no mention of the subject law in the English version. Only if you know exactly what to look for will you find it embedded ‘deep’ within the Greek version.
The Competition and Consumer Protection Service (CCPS or CCP Service) within the Ministry is actually charged with the management of enforcement.
Under Law 103(1)/2007, when the CCPS discovers a breach, it has the power to do various things, including imposing an administrative fine of up to 5 per cent of the turnover of the person or company responsible, or a fine of up to CY£150,000 (€256,290). Anyone who hinders the CCPS’s work is guilty of an offence punishable with a maximum fine of CY£50,000 (€85,430) or a 6-month prison sentence, or both.
From reports sent to the EU from Cyprus we can see that they tell the EU 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 οr mandatory order, including the interim order, against any person (or business) who, according to the Court’s opinion is liable for this violation.’
This statement suggests that the CCPS will even take court action on behalf of complainants if it considers a transgression of the law has taken place.
In an EU document dated October 2009 regarding a Cyprus ADR (Alternative Dispute Resolution) it states that ‘The Competition and Consumer Protection Service has prepared a draft Law which provides for the setting up of mechanisms through which a consumer may seek redress to a problem he/she may have by applying to an out of court body.’
Given the potential of this Consumer Protection Service and the effect it could have some would say it is hardly surprising it has been kept under wraps!
Your UK MEP’s are in the process of sending a joint letter to Mrs Viviane Reding, the Commissioner responsible for Justice and Fundamental Rights, requesting written confirmation that the developer practice of withholding Title Deeds after the full purchase price has been paid (regardless of when the property was bought) is an unfair commercial practice in all circumstances. That is to say the Title Deeds should be transferred immediately otherwise there is an infringement of this EU law.
Furthermore, they request that this unfair commercial practice is specifically listed in the Annex to the Directive, alongside the other 31 unfair practices in all circumstances, so that there is no room for any argument to the contrary.
This should mean that the CCPS cannot rule that the practice is fair as a way of dismissing complaints, or worse still, take 10 or more years testing it in the failing Cyprus courts.
The MEPs are also jointly writing to the UK Government demanding that Cypriot developers and their agents operating in the UK are investigated for infringement of the equivalent laws in the UK.
We are expecting that many, if not all, of the 72 UK MEPs will sign the letters, the coordination of which is being organised by Daniel Hannan MEP and his team. CPAG has also written to each MEP individually asking for their support.
What Can YOU Do To Help?
You will have noticed that all around this geographical region decent ordinary people are standing up to corrupt regimes and calling for radical change. Obviously, the situation is not quite that bad here yet!
You will be relieved to hear therefore that you won’t have to spend several weeks camped out in Nicosia demonstrating for the downfall of the Government or even dodge any sniper bullets! All we want initially in Stage 1 is a few minutes of your time.
Nevertheless, your individual effort combined with all our other supporters, your MEPs and MPs could make all the difference in the lobbying effort.
Firstly, would you please print off this letter, complete the details and send it to the EU Commission in support of the UK MEP’s demands. (Maybe you can get your neighbours/fellow buyers to sign one each as well and use the same envelope to post them). Or please feel free to write your own letter.
Perhaps, you may wish to drop a short email to your area’s UK MEPs asking that they support any future efforts at the EU to address the Cyprus property problems.
Secondly, you may write to your UK MP in a similar fashion requesting that they write to David Cameron, Prime Minister, enclosing the MEP letter for guidance. Or even write to Mr Cameron yourself as well.
Even if you already have your Title Deeds, but think this behaviour by developers is totally unacceptable and want to help others, we ask for your support in this lobbying exercise.
Finally, to all our supporters of other nationalities we ask you to think about writing to your own country’s MEPs in support of this effort.
Buyers without Title Deeds can complain to the Cyprus CCPS that their developer has not transferred their Deeds and request that they take the neccessary actions to effect the transfer. Full details on how to do this will be provided – see below.
Additionally, there are other unfair (‘aggressive’) commercial practices by developers which can only be carried out because Title Deeds have not been transferred immediately, such as cancellation charges and the IPT-type scams. Buyers may wish to make a claim to their developer for refunds, copying the CCPS.
It is also true that because Deeds are not transferred immediately, the Land Registry can get in on the act by charging transfer taxes, years later, on a completely different basis than the purchase price. We also consider this to be an aggressive act under the Directive. In other countries where Deeds are transferred immediately and stamp duty is paid on the purchase price this scam simply cannot happen.
What Are CPAG Going To Do?
We are restarting the website, with all the risk this entails, albeit with a different style and objectives and will be providing amongst other things, full details of how individual buyers can complain to the CCPS. Clearly, there are different buyer situations which need to be covered, so please bear with us whilst we compile the website content.
With buyers’ assistance, we are planning to create a register of the complaints and also the responses from the CCPS. Should the CCPS fail to properly enforce the law we can then jointly (with our MEPs) complain to the EU to take action against Cyprus for failing to enforce the law using the collected data as proof.
Ultimately, this could result in Cyprus being taken to the European Court of Justice (ECJ) by the EU Commission, should they not comply.
We are also of the view that the CCPS is the designated local legal remedy and therefore once this remedy has been exhausted then it follows that individual buyers could then take Cyprus to the ECHR – which is free and can even be done on- line!
We hope you would all agree that no one wishes to destroy the property market or Cyprus economy, nevertheless, equally, no buyer should be at risk of losing their home through no fault of their own.
As most of us have been saying for quite a while this Title Deed mess will need to be drastically addressed at some time; however the longer this action is delayed the more risky it gets for an increasing number of buyers due to developers’ rapidly reducing ability to service their mortgage debts.
Consequently, we need your personal involvement to force this long-needed drastic action to be taken by the Government of Cyprus which may very well come from these proposed activities, so let’s all give it our best shot – this is not a time for leaving it to someone else!
Kind regards and thanks in advance for your support,
Cyprus Property Action Group
© 2011 Cyprus Property Action Group