Owning a property abroad in an exotic location with year round sunshine, beaches and a relaxed lifestyle is a dream that many decide to make a reality but it isn’t without its darker side. As many as 30,000 investors in property in Cyprus are being hit with extra mortgage payment demands as a result of taking mortgages out in Swiss Francs.
The problem is likely to stretch as far back as before the financial crash back in 2007. This was a time when taking out a mortgage in Swiss Francs was seen as low risk due to the currency’s reputation for stability, however all this changed when the Swiss National Bank (SNB) decided to remove its fixed exchange rate with the Euro and set in motion a stampede which saw the currency’s value soar against the Euro.
Swiss Franc Mortgages Not So Safe After all
Back in 2007 many investors in property in Cyprus and other parts of the world might have held the view that the Swiss are always a safe pair of hands but all this was shattered at the beginning of 2015 leaving many property investors facing huge hikes in their mortgages.
Judicare Group, a legal services firm, that is acting on behalf of over 250 UK buyers of property in Cyprus claims that many of its clients didn’t receive independent legal advice on the property deals they were getting into with agents and developers in Cyprus.
Many were steered towards what appeared to be safe Swiss Franc mortgages which in some cases may have been missold. Clients of the firm are currently facing threats of UK litigation and the very real chance of losing their UK homes if they fail to pay up. “Doing nothing is not an option” according to CEO of Judicare, Neal Heaney “The sooner those affected act the better. Clients need to be on the front foot in these situations to give themselves a better chance of defending themselves”.
Judicare Group has a track record of securing funds back for clients in other countries and has managed to uncover several abnormalities in the way mortgages were sold to their clients.
The firm is defending many of these people by going to courts in Cyprus where the purchases took place and not in the UK where the need to first establish jurisdiction adds an unnecessary timely, risky and costly step in the process. If litigation is successful in the UK Courts, then it will be down to the Cyprus Courts to enforce a ruling.
Many unfortunate investors have found that their monthly mortgage repayments have more than doubled after the banks in Cyprus advised that clients take out a loan in Swiss Francs.
Barristers from the Cyprus law firm Triantafyllides & Christoforou (TCA Law), appointed by Judicare, claim that in many of the buyers’ cases the Power of Attorneys used to sign the loan agreements were not valid as they were not signed in strict accordance to the legal process.
In most cases, paperwork was validated without a certifying officer present, making the loan agreement and any other documentation void. In addition, the provisions of the local lending laws were not met.
No Escape Other Than Legal Action For UK Buyers
A recent escalation in the process has seen judgements by the Cyprus courts against UK buyers being enforced in the UK, putting their assets at risk. According to Judicare this makes it crucial that any client receiving a Writ of Summons from a Cyprus Court does not ignore the service and seeks legal guidance immediately.
Judicare estimates that there are over 30,000 people in the UK in similar circumstances from purchasing a property in Cyprus from 2003 to 2008.
Neil Heaney, CEO of Judicare, added: “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.”
To compound the problem, Cyprus like most of the rest of Europe has yet to see property prices rise to the level they were at in 2007 leaving many property owners in negative equity and unable to sell.
A Glimmer of Hope
As the Cyprus Parliament sits in an extraordinary out of session conference to vote through a bill to enable owners of properties who have paid in full or a large percentage of the purchase price to apply for their Title Deeds, thousands of UK property buyers in Cyprus can finally see a glimmer of hope.
This will form some of the subject matter of the free latest seminars to be hosted by Judicare Group, an international legal services company, to help those facing unmanageable financial burdens in Cyprus.
The Title Deeds regulations will be required to implement a bill to protect buyers of immovable property in Cyprus on behalf of whom Judicare Group is acting.
Neil Heaney, CEO of Judicare Group says: “The seminars will explain in detail the circumstances surrounding these loans and the many legal failures of the parties instructed to protect the purchaser in the transactions.
Depending on personal and individual situations, some scenarios may prove legal grounds with which to challenge the Cyprus banks towards the validity of loans and to seek the potential release from these dubious contracts.”
UK Debt collection companies and UK law firms, employed by Cyprus banks, continue to pursue UK clients in parallel with the Cyprus banks stepping up their activity against UK buyers through the serving of Writs of Summons issued out of Cyprus courts at their UK residences for defaulting on their obligations against Swiss Franc loan agreements linked to the purchase of immovable properties in Cyprus.
Many are also being offered early settlement agreements by the banks in Cyprus intended to find a ‘middle way’ solution acceptable to both sides. The Court(s) are not involved in the settlements and neither side can draw any inferences regarding their respective rights and obligations.
Neither are they relevant to any form of ruling on the issue of jurisdiction. Judicare advised their relevant clients not to accept this as the agreement(s) would still leave them in negative equity.
Free Seminars For Concerned Investors
Judicare and its Cypriot Barristers will be holding two free seminars on Saturday 24 October at Birmingham City Football club and Sunday 25 October at Arsenal Football club for all concerned purchasers of properties in Cyprus to come and join the discussion and to understand the legal issues.
For more information, to register for attendance or for a no obligation consultation, contact Judicare on 01438 840 258, firstname.lastname@example.org or visit www.judicaregroup.com