Mortgage Problems in Cyprus

It has been claimed that purchasers only have a certain time in which to make a claim or else they will be time barred.

Under Cyprus Law and remember, this is the one the Banks in Cyprus will use in their Court Actions against the Purchasers in the Courts in Cyprus - this eventuality does not arise. Based on the relevant statutory provision the period of six years does not start to run until the Bank in Cyprus sends a demand letter. It could be said that this applies in the case of the Court Action by The Bank and not by the Purchasers.

In the vast majority of instances we see, and where individual circumstances support such a position, borrowers are seeking the release from the obligations which currently bind them to the Bank(s) in Cyprus under the existing Swiss Franc mortgage agreements as they take up their legal rights before the Cyprus Courts. In such cases we will review personal documentation to ascertain if there are any grounds upon which the individual can challenge the legality and validity of the Swiss Franc mortgage and therefore potentially a way out of the Loan. We have found that in many cases (but not all) there are failings in the way that the Swiss Franc mortgage was presented and also irregularities in the paperwork which may mean that the mortgage can be deemed to be void as a result.

Despite the adverse currency damage which has affected the Swiss Franc mortgages there are many purchasers who wish to retain their properties in Cyprus and as a result are happy to enter into a renegotiation with their Bank in Cyprus to restructure the terms of a new loan. And as a result, to maintain the loan but under different financial conditions which are more manageable.

Renegotiation can take various forms. It is possible to change the interest rate, to change the base currency of the mortgage (out of the Swiss Franc), and to achieve varying discounts due to the currency damage caused. It is also possible to negotiate interest free periods and/or even writing off lump sums from the mortgage.

Whatever you are looking for in your negotiation with your Bank in Cyprus, it is important that you take independent legal advice and assistance when doing so. It is important for purchasers who are having problems with their Swiss Franc mortgages, and who are trying to negotiate personally with the Bank in Cyprus, that the terms of any restructuring deal are reviewed by a lawyer in Cyprus prior to the new deal being signed off.

This will ensure clients are protected moving forward and do not swap one problem with a Swiss Franc loan in Cyprus for another problem with a restructured loan. It is worth noting once a borrower concludes the restructure and enters into the new loan this will remove any and all claims which may have existed under the original Swiss Franc loan agreement.

This is one of the most common questions we are asked and the one where there seems to be the most misinformation:

The simple answer is yes. If the Cyprus Bank obtains a Judgement from a Court in Cyprus against an individual, then yes, the Bank in Cyprus can pursue the assets of that individual if they reside or have assets in the UK in satisfaction of that Judgement. It is simply a formality to register in the UK and enforce a Judgement obtained in Cyprus against the UK assets of a borrower.

At the registration stage, the client of the Bank cannot contest any issues of a jurisdictional nature or raise the issue of their case, they can only raise an issue in relation to the service of the legal Action to him. This service takes place on the basis of an order of the Court in Cyprus and if it is complied with then the service requirement will be deemed satisfied.

The Bank in Cyprus, through their UK lawyers, will then proceed to seek a charging order on the Title of the property of the client in the UK, in most cases, this charge is placed without the knowledge of the client.

It is therefore critical that any individual being served with a Writ of Summons from a Court in Cyprus at their residence in the UK seeks specialist legal advice in order to respond within the stated deadline. There will be no opportunity to challenge a Judgement or its subsequent enforcement.

Additionally, over the past decade of us handling these matters, borrowers will initially receive from their Bank in Cyprus a letter which informs the borrower that their Bank is Terminating the Swiss Franc mortgage due to the non- payment of the loan. Writs of Summons then follow, and it is again critical that clients formally respond to these termination notices and raise their objections to the content of such notices.

We strongly advise that any recipient of such Writs of Summons or termination notices act to address the matter and not simply ignore the service and the potential implications.

We are often asked about the way clients of Cyprus Banks can defend legal Actions against them due to the non-payment of a Swiss Franc mortgage, and there is concern that people are likely to find themselves in serious financial trouble in the future if they ignore the Service of the Writ from the Cyprus Court to them in the UK and/or make no efforts to file the required Notice of Appearance to the Writ in the Cyprus Court of issue.

We base the above in the premise that the jurisdiction of the Cyprus Bank to sue its client in a Cyprus Court can only be disputed in the Court in which the Action is initiated i.e., the Cyprus Court.

If this is not challenged and the judicial process comes to its conclusion with a Judgment in favour of the Bank against its client, then this Judgment will be registered in the U.K with an Order of the U.K Court and will be executed in the U.K as a normal U.K Court Judgment on the basis of the relevant legal mechanism.

https://www.judicaregroup.com/site/blog/overseas-property-blog/cyprus-bank-claims-successfully-settled

There has been lots of talk on the question of jurisdiction. Should you take your case to the Cyprus courts or a British court?

The contracts of sale most often state they are subject to Cypriot Law. The properties, which are the basis of the contracts of sale, are in Cyprus. The Banks who have lent the Swiss Franc loans are in Cyprus. Therefore, Cyprus Courts definitely have jurisdiction. The Banks in Cyprus will not dispute it. On the other hand, the jurisdiction of English Courts has to be proved through Court proceedings as the Banks in Cyprus will dispute it. This means additional legal costs.

Even if English Courts have jurisdiction this is parallel to that of the Cyprus Courts. It is not instead of the jurisdiction of Cyprus Courts. So, purchasers will still find themselves as Defendants in legal Actions brought against them by Banks in Cyprus Courts. This the purchaser cannot avoid. So, in effect they will be â€Å“fighting a battle” on two fronts i.e., incurring double legal costs.

If a Judgment is obtained in an English Court against the Bank in Cyprus: how is it enforced? Only by going to the Cyprus Court in order to register the English judgment. So again, the Cyprus Court, a Cyprus Lawyer and additional expense cannot be avoided.

This draws the inevitable conclusion that it is advisable to pursue the Banks directly in the Cypriot Courts rather than attempting to do this through the British Legal System. This has been the long-held strategy of Judicare and one which has ultimately been followed by other legal firms.

The legal process in Cyprus is based on the UK legal system and the Court procedures follow the same procedures as the UK, in particular the Civil Procedure Rules as set out in the “White book” of 1955

These are the rules that dictate the various steps in the Court process in Actions initiated by the Bank in Cyprus:

The Writ in the Action is filed by the Plaintiffs

It is served on the Defendants

They (the Defendants) enter an Appearance in Court through a Lawyer

The Plaintiffs file their Statement of Claim (setting out the claim in detail) if this is not already endorsed in the Writ served on the Defendant

The Defendants file their Defence, and

The Plaintiffs file their Reply to the Defence

There are time limits in which the above have to take place which can be enlarged by the Court and all the above usually cover a time period of about 6 months.

Thereafter interlocutory Applications are filed by the Parties e.g., in order to obtain documents from the other side etc... And these Applications cover a period of about another 6 months.

Of course, there may be issues of a preliminary nature raised e.g. the jurisdiction of the Court or if the service of the above documents was done properly.

These issues are heard before the Action on its merits is heard and may take 6 to 8 months to be resolved.

This means that the Action on its merits will come for the first time before the Court for hearing about 18 to 20 months after it is filed and then depending on the schedule of the Court it will take its turn.

And of course, the side that loses the case has a right of Appeal to the Supreme Court which takes another 2 years to be completed. Thereafter the 1st judgment of the Supreme Court will bind and guide all the other cases that have not been heard yet and which involve the same issues of fact and law.

Finally, and in order to rest the mind of clients at ease concerning Cyprus Courts it can be said that the Judgments of the latter can be challenged in two European Courts (depending on the issue)- The European Court of Human Rights and the European Court of Justice.