Press Release – 12 / 08 / 2013
DIFFICULT DILEMMAS FACE CYPRUS PROPERTY PURCHASERS
As 31/12/2013 nears when their claims could be time-barred people who purchased properties in Cyprus in the last ten years or so are faced with some tough decisions.
It is estimated that there are 30,000 such purchasers, 10,000 of whom are UK residents. There are those who bought properties outright but have no title deeds so a prior creditor could foreclose to recover the debts of the developer/vendor; there are those who have not been delivered their properties or they were delivered with major deficiencies or without the promised amenities such as a golf course; there are those who purchased in Euros but saw the banks hiking up the interest rate margins and have no possibility to re-finance; there are those that have been maintaining their repayments despite a swelling of their loans by up to 40%, lack of rental income and a fall in property prices by up to 70%; there are those who have given up and defaulted and have been sued or may be sued at any time; And there are those that combine one or more of these afflictions.
As if they did not have enough problems, they are now been told that unless they act immediately any claim or defence they may have may evaporate after 31/12/2013. There is also conflicting advice as to whether they should claim in Cyprus or in England and to complicate matters even further, Alpha Bank, which is by far the biggest lender in this sector are offering 20% write down if the borrower foregoes any claims for mis-selling.
A number of law firms and groups are operating in both the UK and Cyprus trying to help owners but George Kounis, the Consultant leading on these matters at Maxwell Alves Solicitors who have recently filed a major action at the High Court in London against Alpha Bank and 24 property developers says that this division is by far the biggest weakness that owners face. “Owners must united and present a common front,” he maintains. “This way, owners will not get conflicting advice and will know whether a 20% offer by a Bank is good enough.”
Asked whether this would stifle competition, George Kounis argued that it would not: “On the contrary. I am not suggesting that they should disband. We have invited these groups to form a collaboration circle. This way, owners could choose through whom they would want to engage but they would know that they can tap into shared intelligence, the best legal advice and join in collective actions at a fraction of the cost.”
Normally a claim has to be made within six years from the transaction or the alleged breach. The 31/12/2013 deadline is significant for a number of reasons. It is a period of grace when even expired claims can be brought to court. After that date, not only a claim cannot be made but if an owner waits to be sued, he cannot use breach or misrepresentation as a defence and even owners not in default will be at risk of more interest rate hikes without being able to complain. “Any favourable decision in future by a court will not apply to these cases unless they have already filed an action,” explains Kounis. “Unfortunately, there is no such thing as a blanket retrospective application of a decision. Even PPI claims are subject to the six-year limit.”
On the issue of jurisdiction, Kounis is even more adamant: “I can understand that non-UK consumers need to take action in Cyprus but why would a UK consumer want to submit to Cypriot jurisdiction?” asks Kounis. “To take something as simple as language, most UK consumers do not speak Greek. Even with an interpreter, what chance do they have to hear evidence and prompt their lawyer in the right direction? In England, they can join a collective action at a fraction of the cost and get the very best representation by specialist QCs.”
Kounis sees the offer of 20% made by Alpha Bank as cynical: “It is a strange coincidence that now that all the forecasts are showing the Swiss Franc weakening, Alpha Bank wants to switch all its borrowers back to Euros. Is this not what they did in the reverse direction back in 2007 when the forecasts were going the other way? If forecasters are correct, all these borrowers have to do is to wait to see their liabilities reduced without having to give up their claims for misselling.”
This article is intended as general opinion only and may not be relied on as legal advice
Maxwell Alves Solicitors:
Maxwell Alves specialises on Cyprus property matters. It is on the UK Trade and Investment’s panel of recommended advisers for inward investment as well as trusted advisor for UK companies exporting. Maxwell Alves is also on the Law Society’s Network of Lawyers for your Business.
Address: 75 Farringdon Road, Clerkenwell, London, EC1M 3JY, United Kingdom
Contact: George Kounis