The concept of "Trapped Buyers" became widely known following the Amendment of the Transfer and Mortgage Properties Law (Law 9/1965) on September 3, 2015. This is the procedure, which aims to the transfer of Immovable property where the Buyer has fulfilled his contractual obligations and the Seller is unable or fails to transfer the property in his name due to the existence of various legal burdens or other legal barriers that burden the property.
The general spirit of the Law concerns to the protection of the buyer and in the solution of the problems raised by the extraordinary financial circumstances of 2013. The Law aiming to boost the economy through the promotion of transparency in the Real Estate market and the strengthening of the citizens' property rights.
According to the relevant legislation, the transfer of the property may be done by the Director of the Department of Lands and Surveys (hereinafter referred to as "the Director") by its own initiative, or upon the request of the persons specified by the Law, among others, the buyer or the seller.
The Legislator set the following conditions, which the Applicant needs to prove in order to complete the transfer.
A) The full settlement and/or part of the agreed Purchase Price of the Immovable Property in question.
B) The contract of sale must have been deposited at the competent District Lands Office by 31/12/2014. In case that the contract has not been deposited, the Applicant may apply to the Court for the issuance of an order to deposit the contract.
C) The existence of the registered title deed of the property which is the object of the contract and the completion of construction works.
D) The payment of taxes and fees in respect of the immovable property in question.
If the above-mentioned requirements are met, then the Applicants have the opportunity to submit an application with the District Land Registry Office and to provide all the relevant supporting documents and evidence.
By virtue of the Law, the Director has the obligation to notify via written notice of specific type, which is necessary to be served to the Buyer, the Seller, Mortgagee and to all interest persons (holders of registered encumbrances on the property), his intention to proceed with the transfer of the property in the name of the Buyer.
Furthermore, with the abovementioned written notice the Director shall inform all interest parties that they have the right to submit, within 45 days from the receipt of the written notice, an objection to the Director, if one of the following conditions is met:
(a) The Buyer's contractual obligations against the seller have not been fully fulfilled, or
(b) The Contract between the Seller and the Buyer is invalid and/or has been terminated under a Court Order.
In the event of non-submission of any objection or in case of rejection of a submitted objection due to in not meeting the abovementioned conditions, the Director will proceed with the release, eliminate or cancel the mortgage, or registered encumbrance and will transfer the property in the name of the Buyer.
The Seller, the Mortgagee and any person, who derives advantage from a registered encumbrance, or any prohibition, has the opportunity to apply for the transfer of the mortgage, or the registered encumbrance, or the prohibition to any other of the Seller's own immovable properties, instead of releasing and/or eliminating and/or cancelling the encumbrances, mortgage and/or charges.
Provided that, the Director examines the application and, on the understanding, that the Seller is the registered owner of another immovable property, proceeds to the transfer of the mortgage, or of the register encumbrance, or of the prohibition to that immovable property.
The Director in case that the Seller does not own any other immovable property, may accept an application for the transfer of the mortgage, or the register encumbrance, or prohibition from the Mortgagee or from any other person who derives an advantage from a registered encumbrance, according to the Regulations, to the immovable Property of Legal entities which have guaranteed the obligations of the Seller in relation to the immovable property in question, or in the name of natural persons who have guaranteed the obligations of the Seller in relation to the immovable property and at the time of signing the contract, acted as director or shareholder of the Seller or held more than ten (10%) of the Seller's share capital.
At the same time, in the event of a transfer of the mortgage, or of the registered encumbrance or a prohibition to immovable property to anyone of the abovementioned entities, the entity acquires for the purposes of this Act, the status of a mortgagee and his liability is limited to an amount corresponding to the liability arising from the relevant guarantee contract.
Finally, if the Director considers that an objection has been substantiated, the Director does not transfer the title in the name of Purchaser.
These amendments of the Law have positively contributed to the transfer of many properties, allowing many Buyers, to sidestep or circumvent the legal implements blocking the issuing of a title deed in their name prior to the amendment of the Law. From the opposite side, opinions on Constitutionalism or not of the Law differ, which is apparent from the conflicting Judgements of District Courts. However, the Law continues to be implemented in a normal manner and at the same time, the Parliament preparing new Law to amend these provisions in order to ensure the interest of all the parties involved.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.