Living in Northern Cyprus

North Cyprus Legal advice June / July 2010

In: Legal Advice

3 Jun 2010

legal_sectionAnother month and a new set of North Cyprus legal questions. Please feel free to add comments, however Naomi will not be able to comment on these directly. If you have a question for Naomi, use our form at the bottom of this page (click here) .


1 Title Deeds / Mortgage >
2 Obtaining Kocan >
3 Maintenance Problems >
4 Builder Problems >
5 Maintenance fees 2 >
6 Rental Problems >


1
Title Deeds and mortgage
How can we get our Title Deeds when the builder will not remove the mortgage on the land?

“Unfortunately, while there is a mortgage over the land on which your property is situated, it is not possible for the transfer of title to take place. Transfer of title can only take place if the mortgage is de-registered, either over the whole site, or over a share of the site sufficient to allow transfer of the share corresponding to your property.
There have been a number of cases recently where purchasers have purchased a property, made full payment and taken possession, but have then been prevented from taking title due to mortgages having been registered subsequent to the signing of the Contract of Sale.

These cases generally date back to before the introduction of the Estate Agents Law, which established a scheme for the registration of Contracts at the Land Registry. In my opinion, mortgages registered after a third party interest in a property is created should be subject to that third party interest and the banks should be responsible for carrying out the necessary due diligence in order to discover any such third party interests. Unfortunately, however, recent cases seem to suggest that mortgages override contractual interests in property, even where they are created after the Contracts of Sale were signed.

In a recent case on behalf of one of our clients who was in a similar position, we applied to the High Court for an order for a declaratory judgment declaring that the rights of the contractual owner should take priority over the rights of the bank. The High Court ordered us to withdraw our application on the basis that we had already obtained judgment against the construction company in the Kyrenia District Court. Therefore, the High Court did not directly consider the issue of priority between third party rights and the rights of the mortgagee in any detail. However, the judge gave an indication that, had the application proceeded, the outcome may have been in the bank’s favour on the basis that mortgages have a higher priority ranking than Contracts of Sale. I think that another challenge in the High Court could be useful so that at least there would be a definite ruling on this matter. As mentioned above, in our case, we had to withdraw the application because we had already obtained judgment, but it would be open for someone who had not already obtained judgment against the construction company to try to apply to the High Court for a declaratory judgment.

In terms of your own problem, initially you could try to negotiate with the bank through your advocate to find out exactly what the bank’s claims are and whether it would be feasible for the owners of the site to pay off the mortgage in order to receive title. Although this would require the payment of additional funds which you are not contractually obliged to pay, in the long run, you might consider it better to pay this money and salvage your investment rather than running the risk of losing the property if the vendor defaults on the mortgage and the bank commences proceedings to seize and sell the property. You could then try to take legal action against the vendor to try to recover the money which you paid to the bank.
If this is not an option, your only alternative would be to take legal action against the vendor for breach of contract. You would need to carry out extensive land registry searches to determine whether the vendor has any other assets over which you can seek an injunction as security for your claims against the vendor and against which the judgment which you will obtain against the vendor can be enforced.
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2 Obtaining Kocan
Please could you decribe the process and requirements for registering and obtaining individual Kocan for a villa property that is part of a small development of 12. Currently the villas are on a shared Kocan.
Could you suggest persons able to do this work?

“Previously, the only way for separate title deeds for properties on complexes to be obtained was through a process known as ‘parcelisation’ where an application for the land which makes up the site to be divided into separate parcels or plots of land was submitted. The disadvantage of this was that a significant amount of ‘green area’ had to be allocated and the road width requirements meant in many cases the loss of a large area of the land.
This changed in around 2006 with the introduction of the Site Laws. Under the Site Laws, it is possible to obtain an individual deed for the properties on complexes, without actually splitting the land into separate plots. So you have a deed for the freehold of your property which includes ownership of a share of the freehold of the land which makes up the site. However, the deed is an individual deed with the details of the individual property on it.
You could use a Land Registry licensed sub-contractor to do this for you.
Yildiz Govsa who can be contacted on 0542 851 0987 carries out this work.
The final approval for the site must have been obtained in order for the application to be submitted.
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3 Maintenance Problems
If apartment owners do not pay their site maintenance, what if any legal action can be taken against them?
A number of the apartments are let, would we be able to refuse access to the pool,parking spaces,sun terraces etc,as the upkeep of these is paid from maintenence payment

“The maintenance of the common areas of an apartment complex are governed by the Apartment Laws.
Under the Apartment Laws, all owners are responsible for contributing towards the maintenance, protection and repair of the common areas, including monthly maintenance fees. Decisions regarding maintenance issues are taken by simple majority at meetings where more than ½ of the owners are present.
Failure by any of the owners to comply with this can be taken to court by any of the other owners individually or by the maintenance company/manager.
Unfortunately, it is not possible to prevent non-payers from using the communal facilities. However it is possible to withdraw any maintenance services being provided within the maintenance fee to their own apartments. You need to discuss the issue with the maintenance company to find out what is being done to obtain payment. It may be necessary to instruct an advocate to send the non-payers a legal notice threatening legal action is payment is not made.

4 Builder Problems
We are purchasing in the TRNC a villa which is 1 year overdue  on an 18 month delivery.  We tried to get our kochan in May 09 offerring the builder some £3000 (extras)  as we had paid 100% of the contract price in May 09 the builder refused our offer and said he wanted ABOUT  £10.000 more.  There is no justification. I refused but offered £6000. He refused my counteroffer.
In early March 2010 we agreed a settlement of £3000  plus up to a further £4000 on a pound for pound basis with other neighbours contribution towards completing the site.
He said he was out of money.  I gave my advocate £7000 in cash plus  a transfer of money for the taxes.  I asked the advocate if it was settlled, and if anything else could go wrong.  I was assured that it could not. Some two weeks ago my advocate advised that a memorandum had been attached to our file in respect of a debt of ******* for some £80000.
and the transfer of the kochan would take a long while.  He told me our villa could be sold at auction to pay ******* debt
What action can be taken to get our kochan?
Does our advocate have a duty of care to us.?
The builder was effectively blackmailing us for extra cash.  As we had paid the full contractual amount can the Directors personal assets be attacked because of their clear breach of Fiduciary Duties.The villa is fully furnished and we have occupied it.

“The recent global financial crisis and the resulting downturn in sales of property in the TRNC has, unfortunately, pushed some construction companies into financial difficulties. Some construction companies are struggling to find the funds to continue with the construction work and to complete sites in accordance with their contractual obligations. This has meant that purchasers have had to complete sites themselves using their own funds or using outstanding payments due under the Contract of Sale. I assume that this is what has happened in this case. In situations like this, purchasers are faced with the difficult choice of either making additional financial contributions in order to try to complete the properties and salvage their investments, or taking legal action against the construction company for breach of Contract which many people find daunting due to the cost and timescale involved. Many, therefore, prefer to try to complete the site themselves. When considering such action, however, regard has to be had to the issue of securing the title deeds and, as part of such a scheme, the title deeds, wherever possible, should be transferred to the purchasers before the purchasers consider spending further funds on the property, otherwise they could be just risking further money.
When the Estate Agents Law was introduced, it was hailed as a breakthrough for protecting property interests in Northern Cyprus and it was thought that no encumbrances could be registered over a property once a Contract of Sale had been registered. However, recent cases have shown that memorandums and injunctions can still be registered over properties even after Contracts of Sale have been registered. The official response which we received from the Land Registry to this question is that the fact that a Contract of Sale is registered over a particular property, does not prevent a memorandum from being registered over it in the event that judgment is obtained against the vendor in whose name the title deeds are still registered.
I would recommend you speak to your advocate to find out why the memorandum has been registered, what action the vendor is taking to discharge the memorandum and what the demands of the creditor who has registered the memorandum are. As explained under question 1 above, your options would then be to try to either negotiate with the creditor for the memorandum to be de-registered or to commence litigation against the vendor for breach of Contract.
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5 Maintenance fees 2
I purchased an appartment in Lapta in 2005.  My builder is demanding a maintenance fee of £300 a year to pay for cleaning of the stairwell, outside area electric for the stairwell and pool maintenance. Do I have to pay this or can I do it myself?

See point 3 above.
Under the Apartment Laws, all owners are liable to contribute towards the general maintenance, protection and repair of the common areas. If you are not happy with the charges which the builder is requesting for this, you need to discuss this with the other owners as decisions regarding the provision of maintenance service and the appointment of a manager for this have to be taken by a majority of the owners acting together. It is important to check the provisions of your Contract of Sale with your builder to ensure that you are not tied in to a maintenance contract with your builder as a result of the terms of your Contract of Sale. Further, if you have signed a maintenance contract with your builder, you need to check the terms of this to determine the notice period which needs to be given in order to terminate the contract.”
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6 Rental Payments
We were persuaded by our estate agent to rent out our villa for 12months .We signed the contract and the estate agent got a cheque for 6months rental upfront. He didnt put it into our bank and kept giving us excuses why. The tenants moved out after 6months having not paid any bills. We came over at easter changed the locks and the estate agent promised to put the money in our bank but to date he hasnt and now he has cut any contact with us. Where do we stand please?

“You can take legal action against the tenants to recover the money for the unpaid bills. In order to do this, you will need to have an address for service for the tenants so that the court papers can be officially served on the tenants. Because the tenants have moved out of the property, you will have to make enquiries to try to find out where they have moved to or where they are working. You will also need the original Tenancy Agreement with the Stamp Duty duly paid and copies of the bills. Initially, you could ask your advocate to send the tenants a legal notice demanding that payment is made within 7 days and threatening legal action if payment is not received. This may be sufficient to get the tenants to pay.
With regards to the money which has been taken by the estate agent and not passed on to you, again you could ask your advocate to send the agent a legal notice demanding that payment is made within 7 days and threatening legal action if payment is not received. If payment is still not forthcoming, you would have to commence legal action against the estate agent to recover the money.
In addition, you could make a formal complaint about the agent to the Estate Agents’ Union. Under the Estate Agents Law, the Commission of the Estate Agents’ Union is responsible for the regulation and discipline of its members. The Commission has the power to issue warnings, cancel the agent’s licence for a period of 1 year or even to strike the agent off if malpractice is found.”

You can contact the Estate Agents Union on
Sehit Ahmet Beyaz Sok No 6
Koskluciftlik
Lefkosa
Tel: 0090 392 227 36 73
cteaa@cteaa.org
www.kibrisemlakcilarbirligi.org/

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