A Sad Story for Real Estate

Recent press reports refer to a British buyer who has acquired a house from a developer, the developer claiming that the buyer did not follow the payment terms etc and he proceeded to unilaterally cancel his sale contract and sold it after to another British person.

The odd thing about this unfortunate story, is that notwithstanding that the first sales contract was duly deposited at the Lands Office, the developer sold it to a third party. How can this be possible, since we assume that the second buyer also deposited the sales contract with the Lands Office, by which procedure the Lands Office should not have accepted the second contract deposit. If this is the case, the developer should have asked the courts for an order cancelling the first sales contract, remove the deposited contract and give to him back possession of the property (in order for him to resell).

If this did not happen we would suggest that there is something wrong along the line (or that we do not know the full details).

What the press reports suggested is that the original buyer sued the developer, but he lost his case in Court and he is now appealing to the European Court of Justice, since his appeal to the High Court in Cyprus has also been rejected.

This is the worrying part, in the sense that if the E.C. of Justice decides for the original buyer, there will be questions regarding the fairness/correctness of our own justice system and Lands Office procedures and we expect that several legal points will be raised on the subject.

It is a sad story for both sides, since on the one side that of the original buyer and on the other the 15 year old legal case that must have cost in addition to money, both buyer and the developer aggravation and in addition to the psychological effects on both. It will be interesting to read the decision of the E.C. of Justice when it comes about and it is this sort of cases when published extensively, as this one has, will have repercussions on the Cyprus investment program, as well as to the wider real estate market, both for locals, as well as foreign buyers and investors, increasing their destruct for the market. This is another case of delayed justice which Cyprus is plagued with which adds to the whole market a negative name.

In a previous article of ours, we have pointed out that although estate agents bear responsibility for wrong doings (for items that they need to check, such as existing impediments prior to a sale, physical and legal characteristics of the property sold etc) and for which they are required to have a professional indemnity insurance (in case of wrong doing), the developers are not required to have a certain classification (unlike the contractors) as to their capability, be it that classification will not protect necessary the buyers – a top rate developer can do as much damage as a low rate one, but it will help towards the buyers caution/ awareness.

Of course we are not taking sides in any decided legal case, but we have to be very careful as Cyprus real estate is the 3rd largest industry in Cyprus (building industry) and this is one of the reasons that we suggest to our clients to appoint an independent advocate to examine the sales contract, carry out an investigation on the buyer’s behalf and give him an independent advice. It is also a fact that in few cases the advocates are in one way or another connected with the seller (the disadvantage of a small country) and for this reason we suggest that advocates are asked to sign a committed statement for the buyer, that he (advocate) has no connected interest with the seller etc.

If we are to adopt the Trip Advisor procedure in the internet which is widely used for restaurants/hotels etc and adopt the same for real estate sales (developers/agents/ advocates etc), It can be done, but then extreme care is needed, since if an accusation is not correct/does not stand up in court, the “accuser” may be called upon to pay damages for libel etc which could range from a few thousands to few hundreds of thousands (and for which at the end of the day it will not do restitution to the accusing party other than getting his complain out of his chest).

Our memory is long in the sense that it brings forward the Property Action Group, whose aim was to clear the issue of titles and permits. It did produced some results mind you (we initially played a promotional part on their part, but as their action became not to our liking later, we withdrew).

We are here to help distressed people in our industry and our 800 letters reported in our Q & A Column is there for anyone to study.