Banks and credit acquiring companies in Cyprus have agreed to suspend foreclosures on mortgaged properties belonging to so-called "trapped buyers" until the end of July. The decision follows ongoing parliamentary developments aimed at amending the law to resolve this long-standing property ownership issue.

The House of Representatives, acting on a proposal submitted by members of parliament, is working to address the plight of property buyers who have met all contractual obligations to sellers but cannot have the property transferred to their name due to pre-existing legal encumbrances, such as mortgages or other charges.

Both the government and parliament acknowledge the severe social implications of the situation and are pushing for immediate legislative intervention. Lawmakers are seeking to pass legislation enabling the transfer of property ownership provided that a sale contract (or part of it) was concluded and filed with the Land Registry by December 31, 2014, in accordance with the provisions of the Sale of Immovable Property (Specific Performance) Law.

A key objective is to facilitate the issuance of a title deed for the property in question. If the property is subject to encumbrances or restrictions registered before the sale contract was filed, consent from the involved parties will be required for their removal or cancellation.

This legislative effort comes in response to a recent court ruling that annulled specific protective regulations. The aim is to balance the rights of buyers, sellers, and mortgage lenders in a fair and legally consistent manner.

It is estimated that only around half of the 9,500 identified "trapped buyers" will benefit from the upcoming law. An additional 15,000 buyers may be excluded due to violations of urban planning regulations.

To qualify, contracts must have been signed and deposited with the Land Registry by December 31, 2014, or alternatively submitted to the District Court by December 31, 2024.

If a mortgage or other legal burden predates the buyer’s contract, written consent from the relevant lender or legal entity will be required. In cases where such consent is unjustifiably withheld and the buyer has completed all payments, Cypriot courts will be empowered to issue orders enabling the transfer of ownership.

It is worth noting that on September 3, 2015, the House passed the Immovable Property (Transfer and Mortgage) (Amendment) Law, which came into effect the following day upon publication in the Official Gazette. Accompanying regulations were also approved at the time.

That legislation aimed to release buyers from legal deadlocks in cases where sellers were unable or unwilling to transfer ownership, despite buyers fulfilling all contractual terms. The issue often stemmed from properties encumbered by pre-existing mortgages, charges, or prohibitions.

To apply the law’s provisions, the sale contract must have been deposited with the relevant District Land Registry Office by December 31, 2014. If the contract was not filed, the buyer may petition the court to issue an order for its retroactive submission.