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.
Lobbying Efforts
MEPs
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.
Amnesty Legislation
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.
Background
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!
Enforcement Agency
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!
UK MEP’s
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.
Stage 1
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.
Stage 2
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!
Finally
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