A rear-guard action by banks in Cyprus clinging to the hope that scammed property buyers may pay some cash is impacting on thousands of homes.
The banks are taking out court orders against buyers receiving the deeds to their homes claiming that the law protecting the owners is unconstitutional.
Nearly 80,000 homes on the Mediterranean island are thought to be caught up in the action.
The owners bought their homes from developers who had already taken out loans from the banks to fund construction.
In the downturn, many of the developers went out of business having taken cash from the home owners and without paying off the mortgage debt.
‘Unconstitutional’ law challenged
The banks tried to minimise their debts by demanding the new owners should pay off the loans.
In 2015, the Cyprus government passed the ‘trapped buyers’ law which cleared the new owners to apply for the deeds of their properties.
A report from the European Commission in August last year revealed 11,000 deed applications had been made, with 4,000 issued and the ownership of 800 properties transferred.
The banks have held up the process by challenging the 2015 law as unconstitutional. Their argument was agreed by a district court and no further appeal has progressed.
Property owners are accusing the government, developers and banks of corruption and scamming them.
Accusations of corruption
“The professionals on whom we relied to act in our best interests – the banks, solicitors and agents – have turned out to have been unworthy of our trust and have colluded to carry out one of the worst property scams ever,” explains protest group the Cyprus Property Victim Alliance.
“If you are a victim of the scam it’s easy to feel alone, foolish, abandoned and let down. It’s difficult to know who to trust any more – especially when even some of the solicitors who have come along with big promises to get it sorted out are revealed to be just taking advantage of the victims again to charge exorbitant fees without doing much at all.”
One family claims the dispute led to the suicide of Philip Davies last month.
Mr Davies and his wife allegedly owed £700,000 on an initial loan of £275,000 borrowed to buy their home.
He took his life hours after receiving notice that Alpha Bank was taking legal action against the couple.