Skip to content

Property owners in Cyprus accuse banks of unethical lending in fight for title deeds

Campaigners, who are about to start a series of demonstrations against the banks, say that the banks are guilty of ‘unethical lending’ and should agree to, or be forced to, share with any buyer guarantor the balance of any mortgage they are encumbered by.

They are warning that buyers in Cyprus who were deceived into buying properties by developers who have withheld the vital fact that there are mortgages on the land on which these properties are built face being liable as developers go bust due to the economic crisis.

‘If buyers had been informed of the presence of these mortgages then most, if not all, would not have purchased these properties.

The banks involved have effectively made these buyers the ultimate guarantors of these mortgages without their permission or even knowledge, said a spokesman for the Cyprus Property Action Group which is organising the demonstrations.

The group describes what has happened over the last 20 years as ‘organised deception by developers, lawyers and bankers’ and that it ‘is a terrible indictment of the people involved and especially of the successive governments who have failed to protect buyers’.

The government has pledged to sort out the mess but has been painfully slow in terms of sorting it out.

Some owners have been waiting decades for title deeds that the developer cannot grant because the land is mortgaged.

‘Unfortunately, the risks taken are now coming home to roost due to the current global financial crisis.

We are also now discovering just how reckless the banks have been with the orgy of lending over the past few years,’ added CPAG.

They want to know the extent of the problem and in particular the number of developer mortgages outstanding, the number of properties affected, and which developers are in arrears.

One couple whose developer is in difficulties has discovered to their horror that he had a mortgage on their property which has not been serviced for seven years and is now standing at around €90,000.

Another couple whose developer was recently jailed for fraud over theirs and three other properties have a demolition order on them and two mortgages taken out in 1997 and 1999 which have not been serviced since then with the debt now at €164,000.

‘There is no doubt that the banks and their unethical practices are at the root of the major risks buyers in Cyprus currently face,’ said CPAG.

Some owners are so worried that they want to settle the developer’s mortgage so that they can obtain their title deeds.

‘It is absolutely unjust that buyers have to settle developers’ debts but in this situation the sooner that buyers know that the developer is in financial difficulty the better,’ the group added.

The first demonstration takes place this Friday, November 27 at 10am outside the Bank of Cyprus in Paphos whose chairman Theodoros Aristodemou is also the chairman of Aristo, the largest developer on the island.