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Changing the Legal Landscape of “Trapped Buyers” in Cyprus: Legislative Amendments under Law 110(I)/2025

  • Elena Niki Karletidi
  • Jul 7, 2025
  • 3 min read

Introduction


The issue of trapped buyers has, over the last decade, emerged as one of the most pressing social and legal concerns in the Cypriot real estate sector. The term refers to purchasers who, despite paying the full purchase price and fulfilling all contractual obligations, were unable to secure transfer of ownership because of pre-existing encumbrances (mortgages, court decisions, memos, prohibitions) registered by developers or their lenders.

This phenomenon peaked between 2008 and 2015, exposing structural flaws in the financing of developers, the operation of the transfer system, and the balance between contractual rights of buyers and proprietary rights of creditors. Thousands of buyers remained without title deeds, deprived of legal certainty and unable to resell, mortgage, or safeguard their property against foreclosure actions initiated for debts of the developer.


The concept of the trapped buyer


A trapped buyer is typically one who has paid the purchase price and often has possession of the property, but cannot obtain ownership. Their only protection lay in depositing the sales contract with the Land Registry, which created a form of encumbrance but not ownership. This left them exposed to foreclosure proceedings by the seller’s creditors and unable to use the property as collateral or transfer it.

From the sellers’ perspective, developers routinely mortgaged the entirety of their land to finance projects, selling individual units without first releasing encumbrances. Banks, in turn, relied on their security interests, enforcing foreclosures against developers and disregarding the position of end-buyers. The result was a severe loss of trust and stability in the property market.


Legislative evolution


The 2015 Amendment (Amending Law 139(I)/2015) introduced a mechanism allowing the Director of the Land Registry to transfer title directly to buyers, even without the creditors’ consent. However, in Civil Appeal 285/2018 (Supreme Court, 20 June 2024), these provisions were declared unconstitutional for infringing Article 23 of the Constitution (right to property). Applications under this law stalled, leaving buyers unprotected.


The new Amendment of 2025 (Amending Law 110(I)/2025) published at 04.07.2025, aims to restore protection in a constitutionally compliant manner. It amends the Immovable Property (Transfer and Mortgage) Law, creating a more balanced framework on the Buyers' protection:


  • Temporal limits: Only sales contracts signed or deposited with the Land Registry up to 31 December 2014 fall within the regime. Purchasers post-2015 are excluded.

  • Requirement of a separate title: Buyers benefit only if a distinct title deed for the unit exists. Properties lacking titles due to planning or building irregularities remain outside protection.

  • Encumbrances: Where prior mortgages or memos exist, the consent of the encumbrance holder is required for transfer.

  • Judicial remedy for abusive refusal: If consent is unjustifiably withheld, and the buyer has fully paid, the court may substitute the lender’s consent upon application filed within 45 days.

  • Suspension of auctions: Filing such an application suspends foreclosure or insolvency proceedings until the court decides, ensuring temporary buyer protection.

  • Land Registry procedures: New notification forms (e.g. Type IHA) ensure that both buyers and lenders are formally informed of pending transfers and encumbrance adjustments. Mortgages are transferred from the developer’s entire landholding onto the specific unit sold, preserving creditor rights while allowing buyer ownership.

  • Supreme Court procedural rules: The law authorises the Court to issue rules on time limits and procedural streamlining, preventing indefinite litigation and delays.


Practical implications


  • Buyers now enjoy an enforceable right to secure their title against unjustified creditor resistance, achieving greater legal certainty.

  • Developers lose the ability to shift the risk of encumbrances onto end-buyers; they must confront their financing structures directly.

  • Creditors remain protected, but their refusal to consent is subject to judicial review for abuse of rights.

  • The property market benefits from enhanced transparency and restored confidence, encouraging investment.


Constitutional balance and remaining gaps


The 2025 reform strikes a balance between protecting buyers, safeguarding lenders’ security rights, and ensuring smoother market function. It adopts a proportionate model, avoiding the constitutional flaws of the 2015 regime, while providing judicial safeguards and respecting Article 23 of the Constitution.


Nonetheless, gaps remain:

  • Buyers of properties without a separate title (due to planning irregularities or incomplete division of land) remain excluded and effectively unprotected.

  • These purchasers remain “trapped” in practice, dependent on the developer’s completion of outstanding planning or licensing steps, often subject to long delays or uncertainty.


Conclusion


Amending Law 110(I)/2025 represents a major step forward in addressing the trapped buyers’ problem. Its success will depend on effective cooperation among buyers, developers, lenders, and the Land Registry, as well as on consistent judicial application. While not a complete solution, it restores a measure of fairness and legal certainty in a sector where institutional trust had been deeply eroded.



 
 

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