Fly2let - Finding a way through the Cyprus property labyrinth

Cyprus is an attractive destination for overseas property investors. But with the island currently divided, investors should be aware that property rights can be problematic.

A third of Cyprus is currently under Turkish military occupation – a situation that has been the case since 1974. This means the lawful Government of the Republic of Cyprus does not exercise effective control over the northern part of the island.

The ‘Turkish Republic of Northern Cyprus’ – established by unilateral declaration in 1983 – is not recognised by any country other than Turkey while successive UN Security Council Resolutions has branded the TRNC ‘legally invalid’ and called for its withdrawal.

As a result of the 1974 Turkish invasion approximately 200,000 Greek Cypriots fled or were forcefully expelled from their homes and properties in the occupied area. However, they did not give up ownership of those properties.

The Turkish invasion also led to approximately 40,000 Turkish Cypriots abandoning their properties in the southern part of the island and moving to the occupied area, on instructions from Turkey and their leadership. As is the case with the Greek Cypriot displaced persons, the displaced Turkish Cypriot people did not lose their ownership rights.

The property ownership rights of Turkish Cypriots who left the Government controlled south are protected under the laws of the Republic of Cyprus. Relevant legislation has been put in place, most recently (June 2007), with the Law on Immovable Properties making clear that land not used for the public interest remains the rightful ownership of those to whom it belonged prior to 1974. Case law decided by the Courts of the Republic of Cyprus also confirm these rights, with the latest example being the case of Ahmet Suleyman (May 2007).

The Guardian of Turkish Cypriot Properties, an authority of the Government of the Republic of Cyprus, was created after the 1974 invasion to hold and protect properties abandoned because of the invasion until a political solution is reached and their rightful owners can return. Such properties are protected against unlawful sale or exploitation and may only be used in the public interest, in accordance with the laws of the Republic.

It is acknowledged that the limitation of the guardianship status is that Turkish Cypriots who claim possession of their properties in the Government controlled areas may not have it granted to them, as was the case with Ahmet Suleyman. This is a necessary limitation resulting from the need for the courts to protect the displaced Greek Cypriot population that currently resides in such properties until a political solution is achieved.

In the occupied north, displaced Greek Cypriots are in a less satisfactory position since many of their properties have been taken over by illegal Turkish settlers in what the legal Government of Cyprus believes is an effort to change the demographic character of the island.

According to the 1964 Land Registry Office Records, Greek Cypriots owned approximately 78 per cent of privately owned land in the territory now under Turkish occupation. Under the laws of the Republic of Cyprus, European Court of Human Rights judgments and EU legislation, pre-1974 ownership rights are protected and remain in force.

In the Orams case, a property compensation dispute which reached the UK High Court, the judge, Mr Justice Jack, confirmed that land within the occupied area was ‘within the Republic of Cyprus’. And the Cyprus courts have jurisdiction over all land situated in the Republic’s territory.

The logical conclusion of this is that people who purport to ‘buy’, or occupy land belonging to displaced Greek Cypriot owners (the true title holders) are trespassers and must be treated as trespassers.

Similarly the European Court of Human Rights, in Titina Loizidou v Turkey and Myrna Xenides-Arestis v Turkey (both concerning Greek Cypriot refugee land owners who had been expelled from the occupied area) confirmed the original pre-1974 owners’ rights and demanded payment of compensation to the applicants for the loss of use of their properties.

The Turkish Cypriot leadership with the support of Turkey, is promoting the ‘sale’ and exploitation of land and properties in the occupied area, with the apparent aim of transforming the demographics of that area and complicating further an already very complicated aspect of the political problem. In practice, there is no protection for Greek Cypriot properties.

In the case of Meletis Apostolides v Orams, , the Court of Appeal of England and Wales has very recently examined the appeal lodged by Meletis Apostolides against the September 2006 High Court judgment mentioned above issued. The High Court had held a decision by the Nicosia District Court in favour of Mr Apostolídes could not be enforced in England. But the Court of Appeal held that resolution of the predominant issues in the case depended upon the interpretation of EU law and that such interpretation, being far from clear, should ultimately rest with the European Court of Justice.

The outcome will be important not only for the Orams but for an estimated 1,400 British property investors who have ‘bought’ property in the occupied north. They will probably face the same legal consequences as the Orams.

The property issue constitutes one of the core issues of the Cyprus problem. It is also one of the most complicated aspects of the problem.

In July 2006 the leaders of the two communities (President Papadopoulos and Turkish Cypriot leader Mehmet Ali Talat) reached an agreement under the auspices of the UN Under-Secretary General, Ibrahim Gambari to initiate a process (the Gambari Process) which involved establishment of technical committees and working groups which would prepare the ground for negotiations leading to a comprehensive settlement of the Cyprus problem. These technical committees and working groups would cover a wide array of issues including the property issue. The process has, however, yet to start, with the Turkish Cypriot leader refusing to discuss the property issue.

Meanwhile, over the last three years the Turkish Cypriot side has embarked on a policy of illegal expropriation of properties belonging to Greek Cypriot displaced persons by selling them to unsuspected foreigners, mostly British. This has led to further aggravation of the already existing violations of the human rights of the Greek Cypriot owners and to further complications of the property situation.

Foreign investors, who ‘buy’ properties in the northern part of Cyprus without realising the legal risks of doing so, run the risk of being involved in legal proceedings instigated by the legal owners. They might also question themselves on the moral implications of such purchases.

Recognising the problem, the Foreign and Commonwealth Office, has ‘strongly advised’ anybody contemplating buying property anywhere in Cyprus to seek independent qualified legal advice before going ahead.

Foreign Office travel advice alerts potential buyers of property in the occupied area of Cyprus to a 2006 criminal code amendment that makes it an offence in Cyprus to buy, sell, rent, promote or mortgage a property without the permission of the owner (the person whose ownership is registered with the Republic of Cyprus Land Registry, including Greek Cypriots displaced from northern Cyprus in 1974). The maximum prison sentence is seven years.

The amendment to the law states that any attempt to undertake such a transaction is a criminal offence and could result in a prison sentence of up to five years.

Documents relating to purchase of property in northern Cyprus will be presumed by the Cypriot authorities to relate to the illegal transfer of Greek Cypriot property and may be subject to confiscation when crossing the Green Line. Anyone in possession of these documents may be asked to make a statement to the Cypriot authorities and may face criminal proceedings under the 2006 amendment.

Foreign citizens interested in purchasing property in the area under Turkish military occupation are strongly advised to examine thoroughly the legal ownership status of the property concerned, through the Lands and Surveys Department of the Ministry of Interior of the Republic of Cyprus. They must ascertain, firstly, that no violation of the property rights of the legal owners will be affected through the transaction, and, secondly, that the purported seller is the true owner of the property and can transfer a valid title.