Some 20,000 British people who bought properties in Cyprus between 2003 and 2008 have found themselves owing far more than they had calculated and are at risk of losing their UK homes.
In the latest development of this on-going saga a settlement has been made out of court in the UK between some borrowers and the Cypriot banks.
But others intend to take the banks to court in Cyprus over alleged mis-selling of the mortgages, which were taken out in Swiss Francs, resulting in monthly repayments rocketing.
The details of these new settlements are not in the public domain but are likely to be an agreement to decide an amount that the UK buyer will pay the Cyprus bank, either as a lump sum or through a new restructured loan in Sterling or Euro currency.
Loan are illegal, claims legal services company
Judicare, a legal services company acting on behalf of 240 clients who have claims going through the Cypriot courts, said the loans taken out with banks were invalid due to illegalities in the legal process.
Speaking about the settlements in the UK, Neil Heaney, CEO of Judicare, said: “If this agreement is acceptable to those client(s) then it is welcome news for them, however, we are in court in Cyprus on behalf of hundreds of our clients because we believe that the loan agreement(s) with the bank(s) are not valid. There were many irregularities in the process and as a result our position is that the loans are legally void.”
A further consideration is whether, on negotiating or accepting any settlement deals, clients will be able to secure the new finance as the new agreement(s) will be subject to the financial status of the clients and the local lending laws as laid down by the Central Bank of Cyprus.
“This is perhaps a key point,” Heaney noted. “Stricter regulations on the loan of money for properties have been put in place over the last five years across Europe. If a client was refused finance, the deal may collapse and legal proceedings would no doubt continue.”
Power of Attorney
In October 2013 the district court of Nicosia, Cyprus, issued a Judgement which said that the general Power of Attorney by which clients had appointed their lawyers in Cyprus was void. This was issued on one case, however, it indicates that the ruling might apply to more clients with similar cases.
Christos M Triantafyllides, lead counsel for all Judicare actions in Cyprus, from the Cyprus law firm Triantafyllides and Christoforou (TCA Law), argues that in many of its clients cases, Powers of Attorney given to lawyers in Cyprus were validated without a certifying officer present. This therefore makes the loan agreement void.
But even those who signed their own loan agreements have a case as the risks of taking out a Swiss Franc mortgage were not explained to them by the banks.
Heaney said: “We are moving against the banks for not following the relevant procedures and moving against the lawyers for not protecting their clients in the purchase and also the certifying officers if the paper work supports that.”
Trail dates were originally set for late last year but were adjourned and the first batch of around 30-40 advanced cases are now expected to start in around six months time.
Heaney added: “We are still talking to the lawyers of the banks in Cyprus with a view to resolving the issues but it would have to be in terms of releasing our clients without having to pay anything. We shall let the court decide the final position.”
Banks step up action against UK buyers
Judicare also said that since January 2014, Cypriot banks appear to have stepped up their activity against UK buyers serving Writs of Summons on clients at their UK residences for defaulting on their obligations against loan agreements.
Judicare and its Cypriot barristers will be holding a free seminar for all concerned purchasers of properties in Cyprus to join the discussion and to understand the legal issues. This will take place on 12 July at Birmingham City Football Club 13.00 -17.00.
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