Cyprus banks settle early as mis-selling claims continue

Paphos, Cyprus Photo: Sergey Yeliseev

Thousands of British buyers who bought property in Cyprus as far back as 2003 have been left trapped in negative equity after being advised by lenders to take out Swiss franc mortgages. But buyers have been taking legal action against the banks to prove that the purchases, and therefore the loans, are invalid.

"Encouraging" settlements

Claimants in England reached an early agreement to settle outside of court last month, which their legal counsel described as "encouraging". The issue being heard was whether the English Courts had jurisdiction in the claims.

"This may significantly alter the landscape for all victims. We have been battling hard to ensure justice for victims of unconscionable conduct by Cypriot banks, developers, their sales agents and lawyers. This settlement of an early batch of claims on terms acceptable to victims and helps us build on the position we have achieved to date for our clients," he told the Cyprus Mail.

As many as 25,000 Brits affected?

While clients have seen some success, though, the legal struggle continues for lots of others - and many have not even decided how to proceed with their case.

15,000 Brits are thought to have been affected, but Neil Heaney, CEO of Judicare, says that number could be as high as 25,000.

The firm, which specialises in legal disputes, has filed over 250 claims against Cypriot banks to date. Judicare has decided to pursue claims away from English Courts, where buyers have to prove juridisction before being able to contest the dispute.

"Why enter a very long and risky procedure in England when you could go to Cyprus and fight it there?" he tells TheMoveChannel.com. "The English Courts run separate to the Cyprus Courts, not parallel; while you are trying to fight and bring the dispute to England, the bank will sue in Cyprus and you would end up fighting two claims in two jurisdictions."

Heaney hopes that, if the paperwork is supported in each individual case, clients will be released from the invalid loans and that all payments they have made against the loan will be taken back.

"If the clients [in England] are happy with whatever settlement has been agreed and they are able to draw a line under it, obviously, it's welcome news for them."

Thousands of buyers "sitting on the fence"

He says that awareness of the problem is now high, thanks to social media and online forums, but that many buyers affected by mis-selling may still be unsure of what to do.

"There is plenty of information out there - and there is a lot of miisinformation out there too," he warns.

Indeed, the firm has already been receiving new enquiries since the agreement to settle was announced.

"[Affected buyers] are probably quite confused on what they should choose to do, whether they should follow proceedings in England or whether they should follow proceedings in Cyprus," he says.

"I think there are maybe thousands and thousands sitting on the fence, sturggling along paying the loans until a court in England or Cyprus makes a ruling one way or the other."

For those who think that they can attach themselves to an eventual judgement, Heaney cautions that they would still have to file their own claim, which "could take up to a couple of years".

The good news, though, is that while the limitation deadline for claims has been reported as 31st December 2014, those affected have longer to file their claim - as long as they are still meeting their monthly payments.

"The six years will only start to run when the issue becomes a dispute, not from the day the client signed the agreement. If they are not in default and the bank has not issued proceedsings, then the default has not started to run, so that date of the 31st December has no bearing on them."

Where to find advice
 
Judicare is hoping to offer advice to any buyers still unsure about what action to take at a free seminar on Saturday 12th July. Two lead barristers from Cyprus will be in attendance to answer 20 frequently asked questions in detail. The seminar will start at 1.30pm at Birmingham City Football Club and finish around 5pm.

The response so far has been strong, says Heaney.

"We've run four of these over the last three years and there's always been over 100 people attending each. This time, there are 90 or so, so there is still alot of uncertainty out there. A lot of clients are just waiting in the wings to see potentially which way they will move, depending on court proceedings."

Can the island's reputation be recovered?

While there are steps that buyers can take, though, uncertainty still lingers over the Cypriot property market as a whole - not helped by the ongoing situation of title deeds, which Heaney describes as "still mess".

Can the island's reputation ever recover?

"I think that the Cyprus banks are now trying - a little bit too late - to resolve the issues," comments Heaney. "Hopefully, with them being seen to do that, that will bring some stimulation back to the Cyprus property market."

"Maybe your retiree from England is still very concerned about these issues - but they are historical issues. If someone were to buy a house today and take a loan with the bank, they would not be encountering these problems."

For more information, visit www.judicaregroup.com.