It is estimated that thousands of purchasers of immovable property in Cyprus from 2006 onwards may have been adversely affected by being advised by their Cypriot bank - in order to fund their purchase in Cyprus - to take a Housing Loan in the Swiss Franc denomination (CHF).
In the majority of cases we examine – although not all – the Banks in Cyprus had failed to provide to borrowers at the time of taking out the Swiss Franc Loans any information as to the risks inherent in these foreign currency lending facilities. And the complications which could arise as a consequence.
In the majority of cases also that we examine – although not all - the individual Bank had been introduced to the purchaser either by their Cypriot Developer, their Cypriot Lawyer, or their Selling agent.
What are the problems with Swiss Franc mortgages in Cyprus?
The Swiss Franc housing loans effectively funded the purchase of off-plan properties in Cyprus. Stage payments were released by the Banks to the Developers in order to complete the construction of the properties. However, in some cases, monies were released to Developers where little, or no construction had actually taken place. Thus, leaving some purchasers in the extreme and bizarre position of having a Swiss Franc housing loan completely “drawn down” by their Developer but without having a property to show for the monies.
As a result of the foreign currency aspect of these Swiss Franc loans in Cyprus, these purchasers have seen their Swiss Franc mortgage repayments increase in some instances by as much as four times the original monthly projections given to them at the time of the Loan being taken. These increased payments have seen the purchasers unable to service the ever-increasing instalments, and the purchasers have found themselves in direct conflict with the Banks in Cyprus as financial implications have forced the majority of clients to cease payments of their problematic Swiss Franc loans.
What happens if you stop paying your Swiss Franc housing loan in Cyprus?
When purchasers have fallen into a default position with their repayments and have ignored communications from their Bank requesting instalments be brought into line, the Banks in Cyprus have taken the step of issuing legal proceedings (Writs of Summons) against the purchasers in Cyprus Courts in order to recover the amounts allegedly owed to the Banks through the problematic Swiss Franc Loans.
Can a Bank in Cyprus pursue you in the UK in relation to a Swiss Franc loan in Cyprus?
In the above scenario, if an individual stops paying their Swiss Franc loan in Cyprus, then the Bank can proceed firstly by filing a Claim in the Cyprus Courts seeking to recover from the borrower the full balance of the Swiss Franc mortgage. These Writs of Summons are then “served” to borrowers at their UK residences tasking the borrowers to appear before the Cyprus Court of issue within a period of typically 15 days. If – for whatever reason – the borrower fails to make the required Notice of Appearance, this will result in a Judgement in default being entered in the Cyprus Court against the borrower in favour of the Bank. Such Judgements can and have then been enforced in the UK by the Banks in Cyprus against the homes and assets of those borrowers.
It is worth noting, that even at the stage where a Judgement has been registered in the UK against a borrower, and a subsequent Charging Order has been placed upon the UK home of the borrower, we have still been able to negotiate a settlement with the respective Bank in Cyprus.
These settlements foresee an amount being paid to the Bank in Cyprus in satisfaction of the Judgement, the Judgement is extinguished, and the Charging Order is removed from the UK home.
All issues related to the Swiss Franc mortgage are then brought to a full and final end.
We spoke with one of our clients about his experiences and his journey to a successful resolution of his Swiss Franc mortgage problem in Cyprus.
We are one of the leading UK firms of solicitors fighting these cases on their merit in Cyprus Courts - and not seeking to frustrate and/or challenge the Writs of Summons and their UK service in order to delay the legal process. This latter approach by various legal firms has seen purchasers entrenched in two legal disputes – one in the UK Courts and one in the Cyprus Courts – with all of the additional legal expenses associated.
Working with specialist, trusted, independent lawyers in Cyprus we now have behind us over a decade of specialist knowledge and experience dealing with hundreds of clients who bought immovable properties in Cyprus with a Swiss Franc loan. While other legal firms have created the above confusion for purchasers, we continue weekly to achieve successful settlements for our clients. Some have handed their property back to the Bank in full settlement of the claims of the Bank and continued their life free from any stress or fear for their future.
Or alternatively, some have been able to retain their properties in Cyprus under more manageable conditions.
If you are encountering an issue with a Swiss Franc mortgage in Cyprus and don’t know where to turn, or if you are unsure about the legal guidance or strategy being followed by your current legal advisers, we continue to offer a no-cost no obligation initial review of a client’s documentation in order to assess the merits of their claims prior to incurring any legal costs.
If you would like to discuss your case or simply would like more information on our fixed fee approach one of the team will be happy to take your call on a confidential basis at 01438 840258 or via email to admin@judicaregroup.com