Law Firms Clash Over Cyprus Property Litigation Strategy

By ExpatBriefing.com Editorial 14 August, 2013

Over 200 British citizens who bought property in Cyprus using Swiss Franc mortgages are pursuing litigation in Cyprus which they hope will release them from massive debts by declaring legal paperwork and loan agreements to be void, although one law firm has warned that the strategy may be "fatal."

The action is the latest move in the long-running story of buyers who took out loans with Cyprus banks in Swiss Francs. At the time, the currency was thought to be stable and to be a low-interest option, but the cost of repayments subsequently doubled and some investors have defaulted. Purchasers' UK assets are now at risk as judgments in the Cyprus courts are being enforced in the UK.

The buyers claim that they were misled by solicitors and that loan agreements were not signed in accordance with legal process. In particular, they argue that paperwork was validated without the presence of a certifying officer, meaning it should be void, and that local lending law provisions were not met.

The buyers are being represented by the Judicare Group, which has appointed barristers from the Cyprus law firm Triantafyllides & Christoforou (TCA Law). According to Judicare, the action is being pursued in Cyprus rather than the UK as a UK case would need to establish jurisdiction first and it would still be up to Cyprus courts to enforce the eventual ruling.

However, this approach has been criticized by George Kounis of law firm Maxwell Alves. Kounis agreed there had been mis-selling, but he added: "Whether the finer details of how these people were led into signing will be taken into account by a court in Cyprus remains to be seen." He explained that courts in Cyprus might uphold a seller's right to conceal, and that legal action in Cyprus would be more expensive. This is because collective actions cannot be brought in Cyprus, although proceedings can be joined together at a later point. Kounis suggests that European Union consumer protection laws mean that litigation can be taken in England, and that litigants should challenge the jurisdiction of the Cypriot court.

Judicare CEO Neil Heaney stated: "Our clients feel as though they have been let down by everyone – the banks and IFAs who misadvised them and the lawyers who failed to protect them. People were sold a dream home in a beautiful country with manageable monthly mortgage instalments. Many believed that rental income would help with the costs of the property but they didn’t take into consideration currency fluctuations or the tough economic climate. Pursuing the courts in the UK only adds other difficult factors to the equation – time and money. We're advising people not to bury their heads in the sand and to seek advice as soon as possible."

Tags: Court | Investment | Real-estate Investment | Real-estate | United Kingdom | Cyprus | Expats | Investment | Property Investment | Invest | Investment |

 





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