Sale Agreement Priority vs. Foreclosure Authorisation: Legal Implications

Mortgage foreclosures and the process of auctioning mortgaged properties have been significant concerns for creditors and debtors in Cyprus over the past decade. The auctioning of a mortgaged property traditionally occurs as a consequence of non – payment of the mortgage debt. However, the frequency of auctions has notably increased in Cyprus with the enactment of the amending Law N.142 (I)/2014. The amendment introduced provisions allowing mortgage lenders to sell mortgaged properties without the necessity of a court judgment for default debt issuance. In the context of this amendment, Article 44Θ was incorporated into the Transfers and Mortgages Law N. 9/1965, stipulating:

"In the event that the mortgaged property in encumbered by a previous mortgage or any other encumbrance, the written consent of the previous mortgage lender or encumbrance holder is required or, as the case may be, a Court judgment authorising the auction or the sale of the mortgaged property