The Supreme Court has the right and the responsibility to judge a Law as unconstitutional and refer it to Parliament for reconsideration.
In some cases the District Courts have the right to consider a law as unconstitutional if the parties raise the issue and the Judge consider it serious for the outcome of the case.
However the decision regarding the unconstitutionality of the Law affects only the outcome of the specific case and not all the cases. In any case, the decision of the District Judge cannot abolish the Law, which is still active.
We do feel that part of this legislation is unconstitutional and or can be unfair for the banks (if ever someone can say so …but we need to be fair and we do say so…) and the law in facts as this case can help the developers escape without any consequences and this is WRONG. Please note that we don’t feel that the innocent buyers must suffer and it is up to the legislative body and the Attorney General to fix this issue with immediate effect.
We have been advised by the Land Registry that they have already proceeded with numerous transfers of the title deeds in the names of the purchasers and they will continue to do so.
It is our position that the outcome of the decision should not affect all the trapped buyers. The buyers who have paid the developer through a loan agreement with the Bank (mortgage) obtaining a “waiver document” seem that they will not face any problems. The payments of the buyers have been deposited directly to the Bank account therefore the Bank can release the mortgage from their share of land.
The facts below strengthens our position but still it is to be tested further as we feel that the banks cannot challenge an application when the client has a waiver and / or any evidence that he had paid in full through the bank in question. Emphasis again that in this case there was a loan before the buyer purchased and the buyers did not act to protect themselves.
FACTS OF THE CASE (PETITION-APPEAL NO. 71/16)
- The developer has proceeded with a loan agreement with the Bank mortgaging the land for the amount of £240,000(€410,000) plus interest.
- Three houses have been built and separate title deeds have been issued for them.
- The owners have bought their house for the price of £225,000.
- The owners have paid the amount of the contract of sale directly to the developer and not through a loan agreement with the Bank, in cash transaction meaning no Loan.
- The owners have filed the petition to the Land Registry regarding the transfer of the title deeds to their names.
- The Land Registry has served the notices to the parties regarding the transfer of the title deeds to the purchasers (including the Bank).
- The Bank has objected to the notice given by the Land Registry.
- The objection has been rejected by the Land Registry who has proceeded with the transfer of the title deeds in the names of the purchasers.
- The Bank has also requested the transfer of the mortgage on to other properties owned by the developer however the other properties already have other encumbrances.
The Bank has filed the petition-appeal no. 71/16 against the Land Registry, the developer and the purchasers claiming that the Law no. 10/15 (Trapped Property Buyers Law) is unconstitutional.
The District Court has the right to examine the issue in case the Judge considers it important for the outcome of the case.
It is to be noted that according to case law, the decision affects only the specific case and not all the other cases. The Judges cannot abolish any Legislation, which means that the Law no. 10/15 (Trapped Property Buyers Law) remains active and the Land Registry continues to transfer the title deeds to the names of the purchasers.
The District Judge considered that the legislation is contrary to the Constitution as it is against the rights of the Bank. According to him, the Land Registry proceeded with the deletion of the mortgage without giving reasonable compensation to the Bank. The fact that the mortgage can be transferred to other properties of the developer has been considered as insufficient compensation by the Judge.
This way the bank could have lost considerably and at the same time the Developers could have escaped from all problems with no consequence.
OUTCOME OF THE CASE
The District Judge has ruled the Law no. 10/15 (Trapped Property Buyers Law) as unconstitutional and cancelled the transfer of the title deeds in the name of the purchasers.
All the competent Authorities, including the Attorney General are now considering the issue and they will have meetings in order to decide if the legislation will be amended.
At the time, the Land Registry continues to receive petitions regarding the transfer of the title deeds and checks the filed ones, however until the matter is clarified the cases are being put on hold.
We do need to stress to buyers in Good Faith that the ones who bought with Loans we believe that they won’t experience any issues and the ones that bought before loans, will not have any problems.
On the adverse position the ones that bought knowing that there was a loan and they didn’t get a waiver will be facing issues.