Court Order For the Sale of a Mortgaged Property in Cyprus: Know Your Rights
A judgment debt in Cyprus can be collected via a court order sale of any mortgaged immovable property registered under the name of the debtor. The allocation of such order requires the issuance of a summons of movables against the debtor in question.
The immovable property can be sold through the issue of a court and cannot be redistributed if it is the debtor’s primary residence and currently being used for housing any of the family members. Farmers in Cyprus who owe outstanding amounts are also exempted from the sale if it can be proven that retaining the land is absolutely necessary for the debtor’s livelihood or the maintenance of his family.
There is a special provision in Cyprus Civil Procedures regarding immovable property with a mortgage, giving the borrower protection that the amount of the mortgage is secured. Accordingly, when a debt has become outstanding, the creditor may pay the mortgage on behalf of the debtor and he will add the amount to the relevant debt. If satisfied that the funds secured by the mortgage have been satisfied, the court can order the sale of the property. However, if the borrower refuses the creditors offer, the court may then order the re-disposition of the property after safeguarding any payment of the mortgage debt by the creditor appropriately.
Cyprus legislation ensures that the creditor should:
• Inform the borrower of the intention to apply for the issuance of a court order of sale.
• Inform and provide the court of the potential security for the expenses created from the sale or in connection with it.
• Receive a court order whereby the state agrees that the reserved offer for securing the funds due under the mortgage. If such an offer is not made correctly and accepted, the property cannot be sold.
• Ensure that the debt is paid in the following order: to satisfy the mortgage debt, then for payment of the sale & administration expenses, then the payment of the judgment debt, before any remaining balance is given to the debtor (if the proceeds from the sale are sufficient).
If the proceeds are not sufficient for the repayment of the whole mortgage debt and the administrative expenses accruing from the sale, the creditor is liable for the deficit; the court may decide the deficit be added to the sum of the judgment debt as execution costs. There is a similar clause for the protection of the borrowers when a property is burdened with two or more mortgages. The aforementioned provisions are however revoked where a mortgaged debt over an immovable property situated in the occupied areas of Northern Cyprus.
Despite the legislative provisions protecting the residence of the respective debtor and his family, the court may issue the court order of sale as long as there is an adequate sum left for the debtor to purchase another property for the accommodation of family responsibilities. A court order of sale is valid for one year; nevertheless, the court may recommence it before the date of expiry, if the relevant fees for the sale are not remunerated to the Land Registry in a 12 month period.
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