Property Buying Guidance Notes – February 2013
Property Buying Guidance Notes – February 2013
Buying a property is usually a substantial investment for most people so it pays to do research and be careful before making a commitment. Buying property anywhere can be hazardous, buying property in the TRNC is particularly hazardous.
There are thousands of people who have successfully bought, sold or rented property in the TRNC, but there are also thousands who have encountered great difficulties.
Consumer protection laws and ethical property buying procedures that are taken for granted in the UK and in Northern Europe do not exist in the TRNC. Buyers need to take note of this and beware of anyone who advises differently.
Problems include: property being sold more than once, the building not completed although paid for, no right of way access to property bought, no water or electricity connections, poor foundations and bad building practice, and land thought to have been bought being mortgaged or charged before, during or after you have bought it and without your knowledge.
Having thought they had got to the end of the road some buyers then find they have been refused “Permission to Purchase” (PTP) by the Government, or are refused transfer of title until builders taxes are paid, some discover at the end that planning permission has not been granted, sometime the landlord demands extra thousands of pounds to sign over the land title deeds. These are just some of the hazards encountered. So buyers should be very careful.
MNCB & BRS working with other like-minded groups such as the House Buyers Pressure Group (HBPG) have attempted to bring pressure to bear on the TRNC Government to Legislate better protection for property buyers. This is a slow process but there has been some limited success and now some safeguards are available to new buyers. These new safeguards although encouraging have yet to be tested in the Courts.
The experience of the HBPG shows that PTP processes will be faster if progressed personally through the government offices. Do be aware that some Advocates who apply for PTP’s do not progress individual applications once submitted, and may add costs if they are willing to do so. This lack of progressing frequently explains the delay in waiting for a PTP. If the application is individually progressed, it is now generally granted in a few months rather than years. If you have completed a land search and registered your buying contract within 21 days with the District Land Office (DLO) you should have improved security of title. No charges can then be added to your property without you having notice and a chance to object. HBPG can advise you on these extra processes.
As we stated earlier, this new legislation’s effectiveness has not yet been tested in the courts. So be aware that by no means is your protection complete. If for example your builder goes bankrupt before completion you are exposed. So be very wary about buying any property off plan that involves payments ahead of works being completed.
For those with existing problems due to historical flaws in the legal process, to date, all representations to the TRNC Government to amend the Law have fallen on deaf ears. Yes, from the very highest level verbal promises have been made to buyers that all ex-pat houses are safe and that evictions will be stayed. However, the reality is that little has been formally done to solve these historical problems yet. Eviction processes continue due to historical flaws in the contract and property buying processes.
The TRNC Government contend it’s a matter for Courts to decide. As promises made by Government have not been fulfilled it does seem that pressure from vested interests have prevented the TRNC Government from clearing things up in favour of the hapless property victims. This has resulted a in a very depressed TRNC property market, a dramatic downturn in the economy and a large number of legal disputes plus a rise in the number of applications from buyers seeking justice from the European Court of Human Rights (ECHR).
A bright spot is the September Appeal Courts Judgement relating to Harmony Homes development which has upheld Mortgage Law 11/78 and home buyers’ contract rights when they precede a mortgage. This judgement is being now contested by the Bank in question.
If you are thinking of buying or renting property in the TRNC:
BRS does not give specific legal advice on any particular property transaction or problem other than to say that you should not rush into any purchase. You should take time to consult widely and acquaint yourself with the property buying procedure in TRNC. Buying processes are very different from the UK, so you should do thorough research before agreeing to any purchase.
The TRNC can be a property buying minefield, there are thousands of people who wanted to buy a dream villa or flat to only end up with a nightmare. There are also those who have had their dreams fulfilled. The latter’s success is not just luck, but usually by following trusted advice and buying wisely. Try to make sure you join the wiser buyers rather than the sorry ones. These notes will help point you in the right direction.
As a general rule beware, those selling property or related services to you are frequently good on promises and taking money up front but not so good in delivery on those promises.
Marian Stokes of the House Buyers Pressure Group (HBPG) has a massive experience in this area, and is of the opinion that employing a Advocate/Solicitor is not necessary for successful property purchase in the TRNC. HBPG, in her view, can provide all the support necessary to achieve a successful buying result and at the time of writing their services are free.
Buying property in the TRNC is very different from the UK. In the UK we usually deal with firms of Solicitors who have specialists in various aspects of Law, for example, Property Conveyancing, Commercial Law, Litigation, Family Law, Copyright Law, Probate etc. UK Solicitors take responsibility for the buying process on your behalf, if they make a mistake you will be compensated by their compulsory Law Society insurance.
A Solicitor in the UK is called an Advocate in the TRNC; there are many other differences too. In the TRNC the Advocate usually covers all aspects of TRNC law as well as doubling up as a Barrister. So please do be mindful that TRNC Advocates are not usually experts in any particular field of law. Early mistakes or obscure legal processes tend to lead to more disputes and can result in endless Court time to resolve matters. This can cost you dearly so it’s best to get it right at the beginning.
If you do opt for the Advocate route in making your property purchase, be aware that the lawyer may be retained by the company you are buying from. Be mindful your TRNC Advocate is not bound by the same ethical rules or monitored by “The Law Society” in the same way as in the UK. Advocates rarely give a comprehensive “duty of care” to clients, a care level that clients would have a right to expect in the UK. In the case of things going wrong, Advocates in TRNC can use the excuse that clients did not instruct them specifically on covering that item. Rarely are TRNC Advocates called to account if they do not adequately cover client safeguards. Choosing a reliable Advocate could be the most important decision you make.
Should you choose the Advocate route, be sure the Advocate you choose has a very clear written brief from you and does not have any “conflict of interest”, such as also working for the lender, estate agent, seller, landowner or builder you are buying the property from. Some Advocates do not see the need to declare a “conflict of interest” to a potential client. You need to clarify this yourself and get it in writing. If there could be a conflict, then that is an “alarm bell” and you are well advised to go elsewhere.
Generally whether buying with HBPG or Advocate help, it is much safer to buy a completed property with title deeds, and all services connected, including access roads, water, electricity and telephone etc.
If you cannot buy a completed property, secure the land title with access first, HBPG or your Advocate will advise you how to do this, and only then appoint a reputable architect and independent surveyor to progress works against phased payments. It is recommended that you only pay after the phases are completed. Paying up front is very risky in TRNC. Make sure it is clear from the beginning just who is responsible for paying which taxes due on completion, otherwise you may end up paying the lot yourself. In fact if the builder goes broke you will have to pay all taxes before getting the Title into your name, to date the TRNC Government has given no quarter on Taxes. You should ask your Advocate or aide to advise you on the safest way to safeguard you against these eventualities.
If you are renting make sure you have a formal contract agreed by your Advocate or aide which details the maximum rent and period, and who is responsible for which repairs and taxes, or you may have to pay for the lot.
MNBC & BRS would recommend to potential buyers or renters that before making any commitment the first step they should take is to:
Visit House Buyers Pressure Group (HBPG) surgery held on Tuesdays between 12 and 3pm at the Pia Bella Hotel, Girne or visit their web site atwww.hbpg-trnc.net/ . Marian Stokes has invaluable experience and a long track record of helping people. At the time of writing, HBPG services are free.
Arrange a preliminary “free, no obligation, 20 minute interview” with BRS Advocate Peyman Erginel. Ring in advance for an appointment Tel 0392 815 2655. You can read more about the firm which has offices opposite the Law Courts in Girne. The web site is www.peymanerginel-lawfirm.com/
After you have visited any of the above we will be pleased to have you tell us of your experiences, email us at email@example.com
If you have already bought and have an existing property problem:
The problems arising from historically flawed laws & legal processes, disputes and bankruptcies have created thousands of victims, principally expatriate, but including many Cypriots, involving losses of hundreds of million pounds to these buyers and/or dispossession of what seemed legally bought property.
These problems usually result from unscrupulous exploiting “elasticity” or flaws in law, or from bypassing key elements of Property and Contract laws and processes. Some involved in the TRNC building industry have adopted, by normal contract & banking standards, unethical practices to the cost of home buyers. There are also many examples of developers’ bankruptcies and shoddy workmanship.
According to BRS latest information the famous Orams Case still rumbles on with all promises of compensation by the TRNC Government not yet honoured. Problems such as the Orams’ case are unlikely to occur again because of a later European Court of Human Rights (ECHR) ruling accepting the TRNC Property Exchange Commission is a valid domestic remedy. However; the attitude of the TRNC Government to this is revealing.
The Kulaksiz 5 (K5) case is an example of the “stealth” mortgage. The story is illustrated in a DVD “A Few North Cyprus Banks-Behaving-Badly”. The DVD is available locally from DVD shops, from YouTube, from a link from BRS web site, and from a link on www.mncb2011.com. The documentary highlights the specific problem of “stealth” mortgages where unethical lenders may avoid certain processes of law or European ethical banking practice in order to repossess property sold to unwitting buyers. The DVD victims have made well over 100 Court appearances but still live under threat of eviction. The Court hearings, mainly suspended for the summer recess, are still going on. In the meantime the Bank has erected “For Sale” notices in front of their house before the legal processes have been completed. All apparently perfectly legal under TRNC Law. The attitude of the TRNC is also revealing in this case; to date the TRNC Government have refused to intervene to rectify the historical flaws in this process. Meanwhile out of sheer frustration with the whole process In the TRNC the K5 Group case has been referred to the ECHR too. The final outcome of the K5 case will have an important bearing on many in a similar position.
As mentioned earlier, more encouraging has been the recent view of the TRNC High Court. On September 2012 the High Court heard applications from Harmony Estate and an Appeal from Kulaksiz 5. Initial indications are that the High Court will find breaches in Law & Land Registry Office procedures and overrule the Lower Court decisions against the house buyers and insist on retrials. But this has not been confirmed at time of writing.
Many other property buyers with problems have become so frustrated by the lack of action and any attempt to clarify by the TRNC Government, plus long Court delays, that there are now at least 16 cases, involving over 200 owners, referred to the European Court of Human Rights (ECHR) in pursuit of Human Rights justice that they feel is being denied them in the TRNC.
MNCB & HBPG work to influence Government in an effort to clarify Property and Contract law to make it more transparent and buyer protective.
We applaud the work done in helping solving major property problems to date by Marian Stokes and HBPG, and suggest that anyone with major property problems visit HBPG as a first step. The web address is www.hbpg-trnc.net/ . The weekly surgery is at Pia Bella Hotel every Tuesday from 12 till 3. We recommend you do this at the first sign of trouble, taking all particulars with you.
TRNC property problems are numerous, varied and some complex. In addition to shortcomings in the TRNC Law, many problems are due to bankruptcies and contract breaches. Solutions to them require a lot of patience, negotiation and frequently more money needs to be paid by the buyer to get a settlement.
MNCB-BRS do not recommend any one particular approach as it depends on your particular circumstances and on the advice you consider most appropriate to your case.
HBPG or, if you are considering Court action, an independent Advocate can help. The main approaches include:
1) Negotiation is usually recommended. If you can reach financial agreement, it's quicker and often the best value solution. Yes, it is likely to cost you, but paying up to an extra £10,000 against losing a £90,000 property makes financial sense in spite of the apparent injustice.
2) The victim can vigorously defend ownership rights in civil courts. This can be expensive, for you may not always be awarded costs, but get HSBG or a good lawyer to advise you if this is the route for you. Boyralaw Advocates have been very active in this area. Recent representations from Boyralaw to the the TRNC High Court have been more encouraging, but the position is still not clear.
3) The victim can petition the Attorney General to initiate Criminal investigation. If you think something clearly illegal has been done, this costs nothing but takes time in preparation. HBPG can possibly help you prepare a case. If criminal intent is proved you will win your civil case, but if the perpetrator is bankrupt you will not get any damages. However you could end up with keeping possession of the property.
4) The victim can claim Civil Damages in Court. This can cost you if you lose, so consult HBPG or your lawyer and make sure that you have a good case and you are not suing someone who is broke. If your fellow litigant is bankrupt don’t even consider it, it will end up costing you money to win nothing.
5) The victim can petition the TRNC Government. MNCB, HBPG and various groups have done this to date with little to show. The TRNC Government will make sympathetic noises but the banking lobby (and their friends) is a very powerful group against a moratorium for “stealth” mortgages. As most victims do not have a vote in the TRNC there appears to be no local political incentive for Government to do anything. The fact that the housing market has been all but destroyed, the TRNC has a bad reputation internationally, and that they lose revenue in taxes as a result, doesn’t seem as important as the local lobbying pressures on them.
6) The victim can petition the Turkish Ambassador. This has been done to successive Ambassadors, and they have all been sympathetic with homeowners, but they have all taken the view that this is a problem for the domestic TRNC Government. A similar response has been given by the British High Commission whose hands are tied by the fact that the TRNC is not an internationally recognised State.
7) The victim and representative groups can try to motivate the Turkish-speaking Press and Public, including mainland Turkey. This is a continuing process and in spite of great odds a great deal has been achieved by HBPG, MNCB and other campaigning groups. However a lot of the TRNC Turkish speaking press including the English language Cyprus Today have been muted by various threats of legal action from the offending Banks. There are draconian laws to protect Banks in the TRNC but it appears the TRNC Government does not think property buying victims deserve equivalent protection.
8) The victim can petition Turkish Government Direct. This action is being considered by some groups but at early stage. It is expected that the ECHR will eventually pressure Turkey to intervene and clear up the property mess.
9) Pursue ECHR application: As stated earlier 16 groups have applied to the ECHR as they feel that a just domestic solution is unlikely. If many more apply this could be significant in building up momentum for change and force Turkey to intervene.
In summary, MNCB or BRS does not give specific legal advice, and the most important thing is that all victims should consult those who can help them, HBPG, or a good impartial Advocate, and then decide on the best approach for them. There is a lot of experience and some sound advice available free but the only people who can decide on the best individual action are the property victims themselves. In most cases doing nothing will definitely mean they will lose what they thought they had bought. At the same time they should not rush in to spend a lot of money in trying to buy property or solve problems arising without seeking some free advice first.