Banks warn for “trapped” buyers’ title deeds
Banks warn for “trapped” buyers’ title deeds
27/8/2015 13:29
Banks will remain exposed and without collaterals as regards mortgages, warns the Association of Cyprus Banks in a letter submitted before the discussion of the bill regarding trapped property buyers from insolvent land developers.

Members of the parliament also have their reservations on technical issues concerning different categories of trapped property owners.

This bill is a memorandum requirement for the disbursement of the next tranche of € 0,5 bn and should be voted until September 3.

As said again today, in the joint session of parliamentary committees of finance and interior the parliament aims to bring the bill in the plenary next week.

In the document, banks indicate that the bill should be amended so there is an assignment as collateral for the loan of the buyer and a mortgage to be registered for the benefit of the buyer's bank on his loan if he wishes to use the provisions of the bill.

They note that if the owner refuses to register the mortgage, the bank itself should be able to register it, adding that in a different case, banks will remain exposed and without collateral regarding housing loans granted to buyers.

Mainly opposition MPs questioned why the bill only covers transfers up to December 31, 2014 and whether there are legal problems.

Minister of Interior Socrates Hasikos, said it is inevitable that some cases will be brought to court.

Responding with political arguments, leaving aside the technical issues, he said that "whoever passed by the bank took money" noting that "we will not sacrifice the forest for the bush."

He stressed that before the submission of the bill to the parliament, the central bank and international lenders gave their approval.

Mr. Hasikos stressed that there is no risk for the banks since the guardian of the banks, ie the CB, signed the bill.

He said that another bill will be prepared and submitted soon which will cover all cases of buying and selling from 01.01.2015.

He also noted that it is feasible for the bill to be voted until September 3 because, as he said, there is a good atmosphere in the session.

According to Mr. Hasikos, the bill protects the vast majority of buyers.

"Furthermore," he said, " buyers who gave € 1000 as deposit and pay an installment of € 1000 per month and honor their contract, are covered", adding that "the buyer who paid € 50 thousand and owes €100 thousand" is also covered.

He said that with the passage of the bill the entrapped buyer will be able to secure a title deed in 3-4 months, adding that the state will have income from this legislation.

Advocate General Costas Clerides on the other hand, noted that there are flaws in the bill that will be discussed in depth.

He said that when a buyer is consistent it is fair for him to enjoy the protection of the law, but that interferes with the contractual obligations of banks and land developers.

Mr. Clerides noted that banks argue that they will lose their collaterals but, as he said, the law provides that the mortgage will be transferred to a different collateral.

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