# mortgage/ developer advise



## robgod (May 25, 2009)

Hi,

I am having another sleepless night and want to know if it is at all possible to get out of the mess that I have created?

I have paid 170k euros for a one bed property in paphos, ive paid 18k cyp deposit to the developer and have a bank loan for the remainder of the amount. Since signing the contract the developer has drawn down a sum of 20k euros from the bank. 

I am wondering if there is anyway out of this contract? Is it best to instruct the bank to not let the developer draw down any further amounts and let the bank take possesion of the property (building hasnt started yet - so they would be taking posession of a plot and my deposit).

The development is due to finish sept 2010 and i imagine it will be delayed, i dont think i could take the pressure until then, I no longer eat or sleep due to the worry.

I would be grateful for any help.


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## grumpy (Nov 10, 2007)

Hello rodgod, welcome.

You are not alone in this predicament, however your predicament has to be seen as being unique to only you as nobody else will male your payments for you.

Firstly, have you an idea of the real value of the project.
Which one is it.
When does the build commence.
Why has there already been a drawdown if nothing has been done.
What are the contracted due dates/completion levels for drawdowns.

If you cant post them or dont want to identify the project online etc, then you can pm. me. Often once you let the world know your predicament you will find others in a similar boat.

Maybe by the time your apartment is due for completion the market will have started to repair/improve so all may not be the doom and gloom you are currently feeling.
Get in touch.


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## robgod (May 25, 2009)

Grumpy, thanks for the reply. Could you please tell me how i go about PM'ing you. I cannot find the option, Im not sure if this is because i am a new user.


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## Veronica (Apr 5, 2008)

Rob there are many people in the same situation as you and if you can name the development you have bought on you may find that other owners will respond and you can get together with them. 
It often helps if you can talk to other people who are in the same boat.

In the meantime we are here to help you in any way we can.

Best regards
Veronica


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## robgod (May 25, 2009)

Veronica said:


> Rob there are many people in the same situation as you and if you can name the development you have bought on you may find that other owners will respond and you can get together with them.
> It often helps if you can talk to other people who are in the same boat.
> 
> In the meantime we are here to help you in any way we can.
> ...


Hi Veronica,

I would rather not name the developer as I dont want to publisise how bad the development is and thus deter potential buyers for everyone else, after all i may just be panicking about nothing. The fact is I just dont want to have this mortgage round mind neck for the next 20 - especially if rentals are likely to be limited. I rather get out now if poss before I get myself into deep! 

Regards


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## Cleo Shahateet (Feb 23, 2009)

Do you have an attorney? If you don't, I would get one ASAP so you can know where you stand and legally what can and can't be done based on what your contract says. Based on what I have seen and my experience in the property market 170K is a lot for a one bedroom. Of course, I don't know exactly what the property is that you bought re: size, lot, apartment or bungalow but seems overpriced. Try to have your attorney find out what it assesses at now. By 2010, I don't believe the market is going to jump back to the high it had been at previously. It is getting a bit better but it will be a much slower appreciation than before. Good luck!


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## Veronica (Apr 5, 2008)

Cleo Shahateet said:


> Do you have an attorney? If you don't, I would get one ASAP so you can know where you stand and legally what can and can't be done based on what your contract says. Based on what I have seen and my experience in the property market 170K is a lot for a one bedroom. Of course, I don't know exactly what the property is that you bought re: size, lot, apartment or bungalow but seems overpriced. Try to have your attorney find out what it assesses at now. By 2010, I don't believe the market is going to jump back to the high it had been at previously. It is getting a bit better but it will be a much slower appreciation than before. Good luck!


Cleo I have a shrewd idea which development and which developer this is and there have been many thread and discussions about this both here and elsewhere.
There are many many people i nthe same boat and unfortunately most of them have purchased through a UK company and been given promises which will never be fullfilled.


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## Cleo Shahateet (Feb 23, 2009)

Veronica said:


> Cleo I have a shrewd idea which development and which developer this is and there have been many thread and discussions about this both here and elsewhere.
> There are many many people i nthe same boat and unfortunately most of them have purchased through a UK company and been given promises which will never be fullfilled.


Yes, I know and it is a shame as there are many good developers out there. The fact remains that legal representation would be wise whether he gets his own lawyer or the one everyone else is using.


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## BabsM (May 24, 2008)

robgod said:


> Hi,
> 
> Since signing the contract the developer has drawn down a sum of 20k euros from the bank.
> 
> I am wondering if there is anyway out of this contract? Is it best to instruct the bank to not let the developer draw down any further amounts and let the bank take possesion of the property (building hasnt started yet - so they would be taking posession of a plot and my deposit).


To release funds on a mortgage the bank should have had a report from the architect confirming that a particular stage had been reached, based on information taken from your contract. You should contact your bank and ask them why money has been released if building has not started and the first stage payment has not been reached.

Did you give your bank Power of Attorney when you signed the mortgage documents? Do you or your solicitor have to give permisssion for them to release the funds?

You should also contact your solicitor (you do have a solicitor, don't you?) and speak to him about what's happening. Ask him for his advice. If your bank is permitting the developer to draw on funds that he is not entitled to then I would think they are contravening the terms of the Power of Attorney.


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## Chris & Andrea (Feb 15, 2008)

*Mortgage/Developer Advice*

Hi Robgod,
Like yourself I'm another worrying about 'what's occurring'. My problem is not so much with the development, because its an excellent village location with many nearby amenities; more a frustrating lack of progress on site and lack of communication from the developer. Coupled with the downturn in the UK property market, the equity gap becomes forever wider.
On the plus side from the start I employed a competant Cypriot Lawyer who ensured the Ts were crossed and i's dotted in the contract, especially as were were buying off plan. It will be interesting to see how it finally works out, but the developer currently owes me 4,500 CYP.
No stage payments are made to the developer without my signed authority to the bank, even though my lawyer has 'Power of Attorney'.
Hindsight is a great thing and no doubt like a lot of other people with the dream; we would have held back if we had known what was round the corner!
I continue to liaise with my lawyer, but being so far away it is very stressful and I can show empathy with your sleepless nights.
Having or finding a good lawyer is essential, but no way should the developer/builder be drawing down stage payments from your account without your expressed authority or the power of attorney given to your lawyer.
Like yourself in my own case I would be keen to establish who the other four prospective owners are on the small development we are buying into, but I'm wary of over exposing a predicament that may be a result of a slowdown in the building trade?
My thoughts are with you.
Kind Regards,
Chris 






robgod said:


> Hi,
> 
> I am having another sleepless night and want to know if it is at all possible to get out of the mess that I have created?
> 
> ...


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## BabsM (May 24, 2008)

Chris & Andrea said:


> Hi Robgod,
> but no way should the developer/builder be drawing down stage payments from your account without your expressed authority or the power of attorney given to your lawyer.


It was a condition of our mortgage with the Bank of Cyprus, that the Bank of Cyprus would have Power of Attorney (POA) and that to release stage payments the architect would present a certificate of completion for each stage to the bank. They would not have given us the mortgage if the solicitor had POA, we did try!

Unfortunately the architect was over-enthusiastic and presented certificates in anticipation of stages being completed eg he'd certify a stage was complete and send in a post-dated certificate. This created problems at completion because the bank released the final payment based on the completion certificate, without our authority or the authority of the solicitor and BEFORE we had done the final check. Fortunately we had not paid the extras or for the pool so we are with-helding those monies instead, pending resolution of the snags!.


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## theresoon (Apr 11, 2008)

I have no personal experience on this but a friend who had a house build in Greece had the architect email him pictures showing the progress before they would let the bank release any funds. The delays were very minor but due to the difference with the US the house came without kitchen cabinets and closets and without a fence.


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## BabsM (May 24, 2008)

theresoon said:


> I have no personal experience on this but a friend who had a house build in Greece had the architect email him pictures showing the progress before they would let the bank release any funds. The delays were very minor but due to the difference with the US the house came without kitchen cabinets and closets and without a fence.


Its obviously different in Cyprus. All the properties we have looked at over the years came with kitchen cabinets, cupboards and, where appropriate, some kind of fencing or wall to delineate the edge of the property.

As I said, the bank insisted on having power of attorney. They released each stage payment when they received a certificate stating the relevant stage had been reached. Since we weren't informed that a payment had been called for, we had no way of stopping it.


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