What about the rights of
the buyer of property?
(archive article -
PRESS REPORTS
suggest there are about 55,000 individuals awaiting title deeds for their
properties. Most of them have paid developers the full amount agreed for the
property, but still have no clue when the title deed will be issued. They may
have to wait for years, as they are at the mercy of the developer, his bank and
government bureaucracy, all of which have their own agenda.
One thing is clear: protecting the buyer is not a priority for any of them,
because when a developer goes bankrupt an individual without a title deed will
lose what he has paid for. The banks will take over the collateral and the
householder will be left homeless and tens of thousands of pounds worse off.
This is exactly what happened when the notorious developer Pieris
Estates went under back in the 1980s. The bankruptcy even affected diplomatic
ties with
Yet 20 years later the authorities have still to ensure that the buyer is fully
protected legally. In fact the authorities contribute to the whole problem by
delaying the issuing of planning and building permits. It should take three
months for each permit to be issued, but can actually take anything up to two
years. This puts pressure on developers to start projects without the necessary
permits, which can give rise to disputes with the authorities that prevents the issuing of title deeds. If there is a part of a
building that has no approval from the authorities, no deeds are issued.
There have been cases in which no deeds were issued for 30 flats in an
apartment block, because the owner of one flat had arbitrarily violated the
building permit conditions. It seems absurd to penalise 29 other owners over
one person’s stupidity, but it happens all the time. What is astonishing is
that the state is losing hundred of millions of pounds as a result of this shambolic state of affairs, because without title deeds no
transfer taxes are paid. So it does have a real incentive to speed up its
processes. In the above case, for instance, why were the 29 flat-buyers not
issued with title deeds?
The same should apply to the banks, which demand that the entire loan to the
developer is paid off before they release the title deeds which they hold as
collateral. In many cases developers use the loan facilities they have for one
project to start work on another. The result is that the original project is
not paid off -- and the bank does not release the title deeds. In fact banks
gain from the title deeds not being issued because they are entitled to charge
1.5 per cent interest on the value of each property being used as security.
Things are gradually changing, however. The Central Bank is now pushing banks
to view each development project separately. Thus, developers would not be
allowed to use loan facilities for one project to finance another. Also, banks
will have to allow the issuing of title deeds for properties which have been
repaid by the developer -- for example, if 50 per cent of the loan has been
repaid, deeds would then be issued for half the flats in a block.
These are steps in the right direction which offer some protection to the
buyer, but government departments must also speed up their procedures, because
as things are they are providing some developers with excuses for not handing
over title deeds. This is certainly not in the best interests of the buyers
whom the state should be protecting.
Copyright © Cyprus Mail
2003