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Pitfalls increase for Cyprus home owners

12 December, 2013

The hopes of thousands of Britons that defective powers of attorney (POA) could let them off the hook were dashed last month when the Supreme Court declared that an interim order of a lower court which pronounced any documents signed under a defective POA as null and void, did not apply to the main defendants, namely the bank and the attorney.
It only applied, they said, to the certifying officer who had not responded to the summons and did not turn up for the hearing of the application. He was ordered to pay the costs of the application but the pronouncement was otherwise meaningless, said George Kounis, the consultant leading on Cyprus property matters at Maxwell Alves Solicitors in the City of London.
“We must therefore await further developments on this issue when the attorney is given a chance to be heard in court,” Kounis said, adding that “the outcome of this trial should tell us whether a defective attestation is enough to nullify a POA or whether an abuse by the attorney is also required for nullification.”
“Owners must, therefore, be left wondering why the application was made and why the interim order of the lower court was hailed in the property press last month as a great triumph for owners.”
Kounis also said that owners have been advised that the grace period which expires on 31/12/2013 to lodge a claim under Cyprus law for a purchase that occurred more than six years ago, did not apply to them. They were advised that they have six years to file a claim from the date the bank calls in the loan.
“It is the bank that may have six years from the above date, not the owners. The bank would be claiming breach of contract due to continuing arrears from the owner and as such the bank’s cause of action would arise from the date of the arrears. There is no logic to the suggestion that the event that gives rise for the bank to claim, also gives a new lease of life to an event that may have given rise to a claim by the owner. Such an interpretation would make nonsense of the Limitation of Actions Law.”
Kounis said that despite the fact that parliament approved a proposal on December 5 to extend the grace period, owners who relied on the advice that the 31/12/2013 deadline did not apply to them may have been spared the anguish of discovering that their claim, defence and counter-claim have suffered a sudden death.
“They must take great care in avoiding these pitfalls”, said George Kounis. “I was surprised to hear that Britons who bought property in Cyprus and may have a right to claim in England, are considering submitting to the jurisdiction of the Cypriot courts because, they were advised that their chances of success are the same as they would be in England. Why do you think the banks and the developers who have been sued in England are fiercely challenging the jurisdiction of the High Court? It sounds to me like déjà vu.”
Cases in Cyprus take many years to go through the courts and actions that have commenced in England are not expected to progress until the second part of 2014 after an appeal on jurisdiction has been heard in London next June. Even then the loser is likely to refer the matter to the European Court of Justice.
Banks are also just realising that not only are they facing thousands of claims both in England and in Cyprus but even when they have succeeded in obtaining a judgment against an owner in Cyprus, the registration of such a judgment in the UK could be overturned if the rights of the owner to have the case heard in England were ignored by the Cypriot court. This leaves the parties in mid water with nothing else to do but negotiate.
After many months of talks and following the economic crisis in Cyprus, banks are now willing to talk about write-offs, particularly when the loan was given in a foreign currency, the owner is offering a lump sum or the owner’s financial position is shaky, but they are still refusing to address the major part of the problem which surrounds the property purchased and not just the loan which is the by-product, Kounis concluded.