When dreams become nightmares in TRNC

HBPG Endorsement

Between the period 2003 to 2008 there was an enormous surge of interest in and supply of high standard property to non TRNC nationals – predominantly British.  Whilst the international economic situation was positive everything went well for these investors and many of them became the proud possessors of property in Northern Cyprus – not many of them, however, became the proud owners of that property. 

With a buoyant economic situation, many TRNC builders were able to work a scheme whereby they funded the completion of ‘promised’ homes by ‘raiding’ funds from new sales.  Some of the earliest properties were completed by the builders and purchasers were able to move in, not all later purchasers have been so fortunate.  Unfortunately, as is the way with many things in TRNC, for those purchasers who had been able to move in there was a certain ‘relaxed’ approach to completely finishing the deal and title to the properties was not always transferred.  As time passes everyone loses focus with the result that title never gets transferred. 

Purchasers tend to forget that buying ‘off plan’ is a relatively risky business anywhere in the world and that it takes a sophisticated legal system such as that in the UK to afford any protection to purchasers as the build of the new home progresses.  TRNC does not have the same level of protection and, regardless of duly signed and witnessed contracts, the buyer is totally exposed until transfer of title has place. 

As the world economic situation has deteriorated and fewer new buyers have invested in TRNC property, so the funding to finish earlier properties has dried up and a number of builders have gone out of business, owing considerable sums to suppliers but also (perversely) retaining ownership of all properties (assets) built but for which title had not yet been transferred.  When the creditors apply through the legal system for payment, the courts often send these ‘assets’ to auction to pay the debts – regardless of whether the purchase was completed or not! 

There is a solution to this dilemma – the Home Buyers Pressure Group and yourself. 

The HBPG was established some years ago by Marian Stokes in an attempt to help purchasers who find themselves caught in the ‘title trap’ and Marian has achieved some incredible successes along the way.   

The problems seem to come in a couple of ‘flavours’: 

  1. Building works have been finished, possession has been taken but title has not been transferred and now the property is being auctioned to pay the builders outstanding debts (even if they weren’t incurred in the building of the property!)
  2. Building works have stopped because the builder has either folded or cannot afford to pay for any more materials and work to be performed and title has not been transferred leaving the properties part finished and available for auction to pay the builders outstanding debts.

Marian and other volunteers too regularly find themselves camped at property auctions in an attempt to persuade would be buyers that the attractive property deal they are about to enter into is completely unethical and would be tantamount to theft in a different legal system.  Fortunately they have achieved some success in this endeavour but, so far, Marian has not been able to persuade the TRNC authorities that this activity is wrong and that there is a better way. 

When it comes to builders failing to deliver on their contract, things get equally distressing but fear not, once again Marian has an approach which is achieving success. 

Essentially, Marian encourages the affected purchasers to band together to resolve their own problem under her guidance.  This system succeeded for victims of the Santa Fe builder collapse and is succeeding for victims of the Greatstone building collapse.  It is from the Greatstone development at Esentepe that the authors personal experiences originate. 

The Esentepe site was incomplete despite some purchasers having moved into their properties and few titles had been transferred.  Marian secured an agreement with the builder such that when each purchaser had deposited their agreed outstanding payments into a residents controlled ‘pot’ then he would transfer title (subject to Permission to Purchase).  This ‘pot’ would then be used by the purchasers to pay contractors directly for work to complete the site. 

The success achieved by this approach is apparent to anyone who visits the Greatstone Park site at Esentepe.  Thanks to the HBPG, a tiger of a resident who has driven the building works forward, cooperation from the local community and guidance/help from the Mayor of Esentepe – the site is complete with many permanent residents firmly ensconced in their very desirable homes in an absolutely wonderful location.  

But beware it could so easily have had a totally different conclusion and for the help of anyone who finds themselves in any of the situation identified in this article we repeat some of the lessons learnt from our battle below:- 

Before you purchase your dream home ‘off plan’ 

n  Don’t imagine that purchasing a property in TRNC has the same protections as purchasing a property in the UK – even legal contracts are incredibly difficult to enforce in practice

n  Do not purchase a property which is not equipped with a road or mains electricity before it is built – the infrastructure must be in place and the builder must be demonstrably making a personal commitment to finishing your new home.

n  Take advice from the HBPG regarding the reliability of the builder from whom you are buying.  Don’t think that you can protect yourself by having clauses inserted into your contract – lawyers are very happy to take your money to create amended contracts but notoriously reluctant to enforce the amended (or any) contract.

n  Work with the HBPG to establish if there are any financial encumberances on the land such as a mortgage.

 If you have already purchased ‘off plan’ and your builder has floundered 

n  Contact the HBPG immediately

n  Get together as a group of purchasers

n  Gain confirmation from your builder as to the outstanding amounts owed by purchasers to effect their contractual completion

n  Create a contact list for the other purchasers (the builder and estate agent should be able to help here)

n  Obtain a local volunteer ‘tiger’ - you will need a strong and dedicated local presence to organise builders and public authorities

n  Agree your priorities – recognising that it is unlikely that all of them will be achievable

n  Be single minded about achieving those priorities

n  Have one leader.  The HBPG can advise on how to achieve your objectives but only one person should be tasked with delivering them – ideally your local representative.  This ‘tiger’ will forge relationships with local providers and authorities which cannot be achieved from the distance of foreign shores

n  Hold your nerve and support your local ‘tiger’.  Division and argument after agreeing your priorities negates your effectiveness

n  Remember that it could be a long haul before you achieve your goal

 But if were to choose the 3 most important things that rescued our position they would be that we as purchasers: 

n  Banded together, agreed what we wanted to achieve, agreed to make compromises and nominated a single ‘tiger’.

n  Invited the HBPG to be involved and accepted guidance from them.

n  Accepted that we were in a foreign country and that without the cooperation of the local authorities, progress towards our goal would be limited. 

If you have read this article and recognise the situations as an outsider who has not been affected by them then rejoice in your good fortune.  If like me you are less fortunate then please read, inwardly digest and act upon the advice – it has been hard earned over the past 3 years.

Colin Morris

Esentepe

 

 

 

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