We have suggested to the Cyprus Government through the Minister of Interior, a simple procedure in order to clear the path towards securing permits and the property titles speedily.  The problem is not as big as it is made out mainly by the English written press, as well as by several pressure groups, but it is big enough to warrant a solution.  The main causes of the delay in title issue are:

1. The very long and archaic procedure needed in securing the various permits required (11 permits – in Greece 1, in U.K. 2).

2. The delays caused by the Municipal and Governmental Authorities red tape.

3. The development of buildings not in accord with the building permit by the developer.

4. The alterations carried out by the buyers after occupation not in accord with the permits.

5. The financial weakness of the developer/seller relating to the mortgages, memos placed on the land/property etc.

For the above causes, we have put forward simple and effective procedures, which if used as a comprehensive effort, it will solve the problem, clear the past delays and have a clean sheet forward. We have provided a detailed manual of procedures for each problem in the Greek press and to the Government and we repeat it in a summary form to this column as well.

(a) The archaic system and its 11 permits
After securing the building permit, the various certificates required, to be issued in the form of a proposal for approval by the supervising architects/engineers and not by the local authorities. This proposal to be submitted to the Authorities for the permit issue. Those architects who undertake this job to have an insurance cover of €1 mil., so as to compensate the local authorities for any wrong doings-cover up. In addition for serious cases the architects to have their work license revoked. A single certificate requires now anything between 6-12 months to be issued by the authorities, whereas in this way, the time will be reduced to 1-2 months at most (x 11 permits).

(b) The Red tape situation
Local Authorities/Governmental Departments to have time limits set for the various stages required. A Municipal/local council may have other priorities or simply not caring/sharing the worries of the applicants. Unless it is the applicants fault, a reply to be secured within 30 days. If not received to be considered approved as applied.

(c) Developers – wrong doings
To provide a building amnesty for all buildings erected under a building permit dated up to 31.12.07. Unless it infringes to the rights of 3rd parties (e.g. building in a neighbor’s plot) the amnesty to cover excess building density, increase in height by one floor and change of use (e.g. a basement converted into a living room, a covered verandah etc). In such cases a clear cut simple procedure is to be introduced with the defaulting party paying compensation to the local authorities e.g. for excess density in case of residential uses €600/sq.m., in case of increase in floor height and in addition to any added density a fine/compensation of €300/sq.m. to be paid etc. Other minor items, such as retaining walls in excess of the set height, narrower pavements up to a limit of 20% etc to attain a fine of €100/sq.m. of the wrong doing. This will bring in loads of money to the local authorities and in addition to solving the problem, it will speed up this procedure. The supervising architect to submit the list of the wrong doings to the local authority together with his calculations and check payment. He will also have the responsibility to submit then the various certificates for approval to the local authorities with no further inspections etc. This compensation for the illegalities etc has been introduced by Greece and Italy, with very good financial/social results. The Italian Prime Minister has even encouraged his compatriots to do various illegal acts relating to their buildings up to a certain date, but afterwards to be prepared to compensate the state in return. Our proposal has been submitted in full details.

(d) Illegalities by Buyers
To follow the above procedure as individuals and in case of comprehensive development projects (e.g. a block of flats) which implies that all units must be 100% legal in order for all to get a title, to have a new system of “Temporary Titles”. In this case all legal units to have their title issued and including the “illegal” ones, get the properties transferred (the Government will get lots of money in transfer fees estimated at approximately €70 mil.), but those “illegal” who choose not to abide to have a temporary title – This temporary title will mean that the owner will not be able to sell, gift, mortgage etc his property until the illegality is lifted. In this method the non illegal ones will have a free title, whereas those with a “temporary title” having to abide at any time in the future. Full details given.

(d) Financial Restrictions
From now on, all new sales must be accompanied by a mortgage release so that even if the property is mortgaged (which is nothing wrong as such) the buyers properties to be released upon title issue. In case that memos and other impediments are placed on the project/property and for which there are contracts of sale deposited, they should not count as an impediment if the sales contracts are deposited at an earlier date than the impediments.

(e) Other Problems

1. Another factor which distress many buyers is the non-payment of common expenses, causing all sorts of problems including the running down of buildings. The common expenses law, as it is at the moment, is most difficult to implement. In these cases our idea is to have an administrator appointed at the time of sale and forming part of the sales contract. The administrator to be subject to audit by an approved auditor yearly and all residents to be able to make representations to the auditor – The auditor to have the final say acting in a capacity as an auditor/arbitrator between the administrator and those who object. All residents to pay the common expenses notwithstanding their objections where they disagree. Any objections may lead to court, but common expenses must be paid in the meantime in order for anyone to be able to apply. Those who do not pay common expenses to attract a memo by the administrator/auditor blocking their property until such time that the matter is resolved or the common expenses paid.

2. Regarding the issue of property tax (as at 1.1.80), the developer to have an independent valuation done and the property tax is fixed on the date of the sales contract. When the 1.1.80 date value is fixed by the Lands Office adjustments +- to be done. The developer to have the right to collect the tax, yearly, provided he produces audited proof of payment to the tax authority.

For those who are not in the real estate business might think that what we are proposing is theories and solutions difficult to implement. Far from it, because we have procedures and solutions for each and every step, we do not share this view. Notwithstanding our effort to help correct this unsatisfactory state of affairs, some of our ideas have been/are under implementation by the Government, but it takes so long (a) to persuade the Government and (b) to have the legal bill prepared and (c) to get approved by the Parliament. As such people get frustrated.

The privatization of the permits was an idea of ours put forward in 1990 and at that time it attracted a lot of smiles. Now it is implemented for small projects up to 10 housing units. A start but not good enough.

The building amnesty was introduced during the year 2003, but it was so badly drafted that no one used it. At that time we wrote to the Government that the amnesty could not work as proposed - Now it is under consideration again adopting some of our ideas.

The temporary titles solution is doing well and the Minister of Interior as well as the Director of Lands & Surveys found it to their liking – A proposal is being prepared.

The compensation cost for illegalities as we proposed has not been met practically we are afraid (submitted 6 months ago). We hope now that Greece and Italy (Spain is considering it) have adopted it, we will have a better chance of success.

The mortgage release to accompany a sales contract has been understood by the authorities, but this will relate to new sales. Existing sales might have a problem in some cases – We have not come up with a solution on this as yet. We will come back on this.

Our proposal to disconnect the certificate of final approval with the occupation of properties, although it is understood, needs a lot of work to pass it – Submitted to the Government 3 years ago.

For all these and other wrong doings of the building industry, we need one open minded, efficient and capable person to take the problem of the building industry as his only job and to work under the direction of the Minister of the Interior. A person equivalent of the ex president of Cyprus Mr George Vasiliou, who headed Cyprus’ negotiating team at our E.U. negotiation when joining, is an indication. This super-administrator to have wide powers and come up not only with his own ideas, but implement them also within a period of 12-18 months.

www.aloizou.com.cy

www.aloizou.ro

www.aloizou.ru

ala-HQ@aloizou.com.cy