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Recent Developments in Mortgage Law

 

Team LawDocs

In 2019, the Parliament has passed the Transfer and Mortgage of Property (Amending) (No. 4) Law of 2019 (the “Amending Law of 2019“) with 27 votes in favour of the proposed amendments and 23 against, however, the President of the Republic of Cyprus has referred the Amending Law of 2019 to the Supreme Court in order for the latter to determine its compatibility with the Constitution of Cyprus.

On 3rd of June 2020, the Supreme Court issued its judgement in Reference no. 2/19, rejecting the above petition and deciding that the Amending Law of 2019 complies with the Constitution and does not violate the articles no. 23, 25, 26, 28, 35 and 179 and articles no. 127 and 130 of the Treaty on the Functioning of the European Union.

In light of the above, we summarize below the main amendments introduced through the Amending Law of 2019:

Contents  hide 

1 1. Timeframes

2 2. Seventh Ground of Appeal – Article 44C (e)

2.1 3. Protective Order issued under the provisions of the Insolvency of Individuals (Personal Repayment Plans and Debt Relief Orders) Law of 2015 and ESTIA scheme

3 Related

1. Timeframes

In relation to the prescribed timeframes, the Amending Law of 2019 will essentially extent the deadline:

  • to repay the mortgaged debt as per Notice Type ‘I’ from 30 days to 45 days;
  • to file an appeal to set aside Notice Type ‘IA’ from 30 days to 45 days from the date of service of Notice Type ‘IA’.

2. Seventh Ground of Appeal – Article 44C (e)

  • The Amending Law of 2019 has introduced a seventh ground of appeal for the setting aside of Notice Type ‘IA’. Particularly, Article 44C (e) provides that Notice ‘IA’ may set aside if the mortgagee, being a credit institution or a credit acquiring company, has refused to or failed to proceed with a restructuring of the credit facilities as prescribed in Part VIA of L. 84 (I)/2010 and Directive 107/2015, or such mediation procedure is pending before the Financial Ombudsman and has not yet been concluded.
  • Provide that the Amending Law of 2019 enters into force as it currently drafted. Then in our view Article 44C (e) will open the floodgates for abusive litigants and strategic defaulters. As the latter will merely lodge an unfounded application before the Financial Ombudsman. Against credit institutions and credit acquiring companies claiming that they have not complied with Directive 107/2015.  Additionally, it will impose a disproportionate onus on credit institutions and credit acquiring companies. As they will be obliged to send letters of offer for the restructuring of credit facilities. Even in situations that is evident that the debtors are not be cooperative.  In the event that an application is lodged before the Financial Ombudsman. Then Notice Type ‘IA’ will be set aside until the conclusion of the proceedings as per the provisions of Part VIA of L. 84 (I)/2010.
3. Protective Order issued under the provisions of the Insolvency of Individuals (Personal Repayment Plans and Debt Relief Orders) Law of 2015 and ESTIA scheme
  • The mortgagor will be in a position to set aside Notice Type ‘IA’ if an application filed under the Insolvency of Individuals (Personal Repayment Plans and Debt Relief Orders) Law of 2015 and ESTIA scheme is pending.

Τhis law has not yet published in Government Gazette. And we cannot comment on the date of its enforcement. Since it has not yet received the assent of the President. A detailed update shall be issued as soon as there is further clarity.

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