News
Cyprus & World News

“Banks need to compromise” over crooked property deals

03 April, 2014

UK law firm fends off European order to defend buyers

A law firm in the U.K. has successfully overturned a European Enforcement Order (EEO) against a number of home owners who are being sued by banks and developers in Cyprus, on the grounds that the court order relates to the mis-selling of properties.
“The EEO should not have been issued in relation to consumer loans in the first place, as the 500 or so cases that we are handling at the moment are not related to cross-border funding,” George Kounis of Maxwell Alves Solicitors in London told the Financial Mirror.
Maxwell Alves is one of a number of UK-based law firms taking action through the UK courts on behalf of British property buyers who allege they were mis-sold loans denominated in Swiss Francs to purchase property in Cyprus.
The majority of the cases involve banks, with about three quarters related to Alpha Bank and Emporiki, a quarter to Bank of Cyprus and Laiki Popular and just a handful from Hellenic Bank.
Kounis added that the EEO could only apply to default in cases of cross-border loans or financing. But in his cases, these are home owners who had been duped or mis-sold properties that did not have title deeds and faced other problems, unrelated to th current crisis and the recovery by banks of non-performing loans.
In some cases, property owners did not even realise they were getting a loan, others found themselves unable to pay and others still decided to stop making repayments after feeling cheated. At some point the banks took recovery action and after years of ignoring the inevitable, enforcement proceedings are now underway.
“We are receiving pleas for help daily,” said Kounis, adding that it takes time for the bank to secure judgment in Cyprus and enforce it in the UK but time has passed and they and are now making their appearance in Britain.
“Banks are willing to listen but not if it appears to them that the client has been ignoring them. Early dialogue is the best and least costly way forward,” he said.
Kounis added that “banks should really need to compromise with the property owners in most of the cases, as the legal procedures will be costly for both sides.”
Enforcement in England, however, is only easy for the banks if not challenged.
“There are ways to frustrate their actions here but it is costly and involves applying back to a Cypriot court that issued the European Enforcement Order to have it set aside,” explained Shauna Lewis, the litigation solicitor handling these cases at Maxwell Alves.
“In the past week or so, we have dealt with an Order for Sale of a property, charging orders and bankruptcy proceedings. Unfortunately defendants waited until the last minute to contact us so there was no time to negotiate a stay with the Bank. Had they done it sooner they could have avoided these costs and the anguish”.
But Kounis said that one case has already been adjourned fro a longer term, while agreement has been reached in two other cases with the bank in question considering withdrawing the EEO or at least adjourning further action.
“People who entered into a property transaction in Cyprus in the last ten years or so, are very likely to have one or more claims that need to be addressed. From the way the sale was conducted through to the way the loan was packaged, the interest rate was hiked and hard currency loans caused them substantial foreign exchange losses,” he said.
“A number of people have buried their heads in the sand, some thinking that there is nothing they can do, others believing that they pulled out of the transaction, therefore, the matter was closed only to find bailiffs knocking on their door and others still falling into arrears and expecting legal action but not really taking any precautionary measures. There is also a large number of people who believe that if and when other claimants win their cases in court, the award will also be applied to them without realising that without claiming they have no such entitlement.”
Maxwell Alves Solicitors emphasise the need for prospective clients who are in arrears to act early to avoid having to defend legal action in Cyprus and frustrate enforcement action in England which can be very costly. Prospective clients who are not in arrears also need to act if their claim is to be addressed.
“If nothing is done, then you will continue to see “ghost towns” such as large-scale developments in Tersefanou or Mazotos, which is not doing the Cyprus property market or its reputation any good. The present and past government have lost a lot of opportunities to address the issue and to recover their long-lost credibility,” Kounis said.