{"id":45974,"date":"2024-12-03T09:11:46","date_gmt":"2024-12-03T09:11:46","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=legal_developments&p=45974"},"modified":"2024-12-03T09:11:55","modified_gmt":"2024-12-03T09:11:55","slug":"constitutional-clarity-the-decision-of-the-court-of-appeal-on-cyprus-law-in-relation-to-the-provisions-44%ce%b9%ce%b7-44%ce%bab-of-the-transfer-and-mortgage-of-real-estate-law-of-1965-9-1965","status":"publish","type":"legal_developments","link":"https:\/\/my.legal500.com\/developments\/thought-leadership\/constitutional-clarity-the-decision-of-the-court-of-appeal-on-cyprus-law-in-relation-to-the-provisions-44%ce%b9%ce%b7-44%ce%bab-of-the-transfer-and-mortgage-of-real-estate-law-of-1965-9-1965\/","title":{"rendered":"Constitutional Clarity: The decision of the Court of Appeal on Cyprus Law in relation to the provisions 44\u0399\u0397 – 44\u039aB of the Transfer and Mortgage of Real Estate Law of 1965 (9\/1965)"},"content":{"rendered":"

A recent judicial ruling declared unconstitutional the provisions contained in the articles 44IH – 44KB of the \u00a0\u00a0Transfer and Mortgage of Real Estate Law of 1965 (9\/1965).<\/strong> The abovementioned articles regulate the process of issuing title deeds to \u201cEnclaved\u201d buyers through elimination or discharge of previous encumbrances, such as a mortgage.<\/p>\n

Cyprus law on Transfer and Mortgage of Immovable Property (No. 9\/1965), as amended by Law with No.139(I)\/2015 (the\u00a0Law<\/strong>), allows for the compulsory transfer of immovable property in the name of the \u201cEnclaved\u201d buyers when the seller fails to do so. Articles 44IH \u2013 44KB of the Law regulate this procedure by addressing the elimination or discharge of previous encumbrances, including \u00a0mortgages.<\/p>\n

However, the Cypriot Court of Appeal, in its recent judgment\u00a0Bank of Cyprus Public Company ltd v. The Director of the Department of Lands and Surveys in Paphos and others, Civil Appeal No. 285\/2018, 20\/06\/2024<\/strong>, found these provisions to be unconstitutional, citing conflicts with Articles 23 and 26 of the Constitution.<\/p>\n

Background<\/em><\/p>\n

The Bank of Cyprus (the\u00a0Appellants<\/strong>) provided loans to a developer (the\u00a0Defendant 2<\/strong>), who pledged two mortgages as security. The case also involved an \u201cEnclaved” buyer (the\u00a0Defendant 3<\/strong>) who purchased an apartment from Defendant 2 which would be built on two properties that were secured by the abovementioned mortgages. The contract of sale between Defendant 2 and Defendant 3 was deposited on 05\/02\/2004 within the Land Registry Office for specific performance.<\/p>\n

Later, on 27\/09\/2016, Defendant 3 initiated proceedings under the Law to transfer the apartment into his name with the application AEA 1744\/16. Defendant 3 exercised his right under the Law and filed an objection against the decision of the Director of the Department of Lands and Surveys (the\u00a0Defendant 1<\/strong>), concerning the transfer of the property and the deletion of the existing mortgages (the\u00a0Decision<\/strong>). After the objection was rejected, Defendant 2 filed an application before the District Court to annul the Decision and to declare the Articles 44\u0399\u0397 – 44\u039a\u0392 of the Law unconstitutional.<\/p>\n

The Judgment of the District Court<\/em><\/p>\n

The District Court ruled in favour of Defendant 1 and Defendant 3, rejecting the application without considering the alleged non-conformity of Articles 44\u0399\u0397 – 44\u039a\u0392 of the Law with constitutional provisions.<\/p>\n

The Judgment of the Court of Appeal<\/p>\n

Defendant 2 appealed the District Court\u2019s decision, arguing, among other points, that the District Court erred in failing to assess the constitutional compliance with the Law\u2019s provisions.<\/p>\n

The Court of Appeals upheld Defendant 2\u2019s arguments, overturning the appealed decision of the District Court.<\/p>\n

Findings of the Court of Appeal<\/em><\/p>\n