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Trapped Buyers can possibly get their title deeds under new law

Trapped Buyers can possibly get their title deeds under new law

Amendment of Streets and Buildings Regulation Law Chapter 96 and Immovable Property (Tenure, Registration, and Valuation) Chapter 224.

On 14/4/21, two significant amending laws of the Immovable Property (Tenure, Registration, and Valuation) Chapter 224 of the Laws (Law Ν. 54(Ι)/2021), and of Streets and Buildings Regulation Law Chapter 96 of the Laws (Law Ν. 53(Ι)/2021), were published in the official gazette of the Republic of Cyprus, and thus came in force.

Both amending laws which will be discussed below, have an aim to allow the transfer of property, for which a certificate of unauthorized works was issued subject to the Article 10Γ of Chapter 96, with a subsequent restriction on voluntary transfer entered by the Land Registry in accordance with the Article 65KZ of Chapter 224.

State of Affairs before the enactment of the amendments

Before the analysis of the abovementioned amendments, it is worthy to present the overall state of affairs that existed before their enactment. According to the law 48(I)/2011, which amended sections 65KB and 65KΓ of Chapter 224, in cases where the registered owner of the immovable property (Developer), whose registration needs modernization ( in essence issuance of the title deed), omits to apply for the issuance of the separate title deeds, the Director of the Land Registry can force the issuance of the title deeds, either ex-officio or through an application of any interested person (e.g the purchaser), who has submitted the contract of sale to the Land Registry in accordance with the provisions of the Sale of the Land ( Specific Performance) Laws.

After the implementation of the above amendments, the new units which arise from the licensed developments could be distinguished into three categories:

1)   Those who were in full compliance with all the relevant licenses given by the Relevant Authorities ( Responsible for the issuance of the Planning and Building Permits – Municipalities/ District Offices/Planning Authorities), were obtaining new title deeds without any notices or restrictions.

 2)   Those who were partially in compliance with all the relevant licenses given by the authorities, but due to the fact that the departures from the rules of the licenses were not significantly affecting security, health, and rights of the owners, a title deed issued contained notices that were not constituting an encumbrance on the property.

  3)   Lastly, those who were completed significantly violating the security, health, comfort rights of third parties, and thus justifying the issuance by the Director of the Land Registry of a title deed, not only with notices but also with forbearance on the voluntary transfer of the property, and the encumbrance of the property for the benefit of the Relevant Authority.

Procedure

The Process of encumbering the property under the previous law was as follows: the relevant authority in the process of evaluating the readiness of the registered owner of the immovable property to issue separate title deeds, could under Article 10Γ of the Ch.96, in case the development was severely contradicting the license terms, issue a certificate of unauthorized works, which then was sent to the Land Registry as a demand to prescribe restriction on any transfer and encumber the property in favor of the Relevant Authority. At the same time, Article 65KZ of Ch224 stipulates that the receipt by the Land Registry of the certificate of unauthorized works constitutes sufficient reason for the Director of the Land Registry to note the precise irregularity, and also to forbid any transfer of the said property. In essence, these two Articles govern and connect the procedure for both entities- Relevant Authorities and the Land Registry. The rationale behind these two provisions of the law was to impose pressure on the registered owner of the land to fix these irregularities.

Exceptions

However, both these Articles were stipulating that the certificate of unauthorized works alongside the ability of the Director of the Land Registry to prescribe restrictions and encumber the property, were only applicable in situations of the voluntary transfers, and were not affecting inter alia, the involuntary transfers of the property, decision of the courts to transfer the property under the Sale of Land ( Specific Performance) Laws, Probate transfers, and gifts.

First attempt to amend the law.

On 4/3/21, the House of Representatives of the Republic of Cyprus has voted for amendments of these two Articles, adding to the exceptions such as the involuntary transfers, gifts, probate transfers,  also the transferor/and mortgage which is executed with the consent of the enlisted owner in the context of the credit restructurings or settlements of the loans.

However, the above amending laws on 5/4/21 were resent for re-examination to the House of Representatives by the President of the Republic in accordance with Article 51.1 of the Constitution. The reason for the referral was the possible violation of the Right of Equal Treatment under Article 28 of the Constitution since only those who are acting in the circumstances of the restructuring and debt settlement could enjoy these amendments. Furthermore, as a consequence of these amendments, the Credit Institutions would receive in their possession a significant amount of properties that were constructed violating license terms, and thus could not be sold on the free market. Having in mind the overall time for which the Credit Institutions can hold the property ( 3 years), this could possibly entail legal issues as to the status of these properties in the future, which the law cannot give at the present time. The Parliamentary Committee on Internal Matters suggested to the House of Representatives to examine the renewed texts of the amending laws, which would include the ability to transfer the properties to all interested persons and not only limited to credit facilities restructuring circumstances, however, the validity of these amending laws to be limited until 31 December 2021.

The current state of the law

Consequently, on 14/4/21, the House of Representatives has voted two amending laws (Laws Ν. 53(Ι)/2021 the Law Ν. 54(Ι)/2021), adopting the suggestions of the Committee. Therefore, the current law, allows all interested persons upon the consent of the registered owner of the property (The Developer), to apply for the transfer of the property regardless of the existence of the certificate of unauthorized works. However, this ability will last only until 31 December 2021.

Giovanis Kouzalis International Property Lawyer & Associate Lecturer of Property Law at UCLan Cyprus