28 May Setting aside a forced sale notice
Setting aside a forced sale notice
by George Coucounis
THE mortgage creditor, in the event of the mortgage debtor being in default, resulting in the whole amount of the balance of the debt becoming payable and the default being for a period of not less than 120 days from the date it is payable under the loan agreement or the provisions of the law, may undertake the procedure provided for the forced sale of the mortgaged property. The relevant notice of arrears or claim for the payment of the judgment debt is accompanied by the notice Type Θ provided by law, unless the mortgage creditor secured a Court judgment or filed an application for the sale of the mortgaged property in auction. If there is no response by the mortgage debtor or any other interested person, the notice Type I is sent accompanied by a statement of account of the mortgage debt owed, interest and other expenses and the debtor is required to pay the amount within 45 days from the date of the service of the notice. Through the notice, he is informed that in case of non-payment of the amount due, the mortgage creditor may exercise his right to sell the mortgaged property in auction based on the provisions of the law. Also, after the service of the notice Type I, any competent authority, upon submission of a relevant application by the mortgaged creditor, provides information on taxes, dues and obligations burdening the mortgaged property within 15 days from the date of the submission of the relevant application.
If the mortgage debtor or other interested person does not comply with the requirements of the Type I notice, the mortgage creditor may serve the debtor and the interested person with a second notice, Type IA, in which it is stated that the mortgaged property will be sold in auction. This notice is served within a period of not less than 30 days from the specified date and time of the forced sale of the mortgaged property and the mortgage debtor or the interested person, within 45 days from the date of receipt of the notice, may file an appeal to the District Court to set aside the notice only for the reasons stated in the law. The reasons are restrictive: the notice served does not meet the relevant requirements of the law in type or in context, or it has not been duly served, or it has been sent before the expiration of the payment deadline, or a restrictive order has been issued, or the mortgage creditor, if it is a credit institution, refused to participate in a restructuring process or if the mortgage debtor is approved to participate in the Estia scheme for dealing with non-performing loans and support vulnerable social groups.
Following the service of a notice Type IA by a private bailiff, a banking institution notified the debtor that his mortgaged property would be sold in electronic auction; he filed an appeal to the District Court of Paphos, requesting an order annulling and setting aside the notice and the electronic auction and other relevant remedies. The Court in its judgment issued on 5.2.2021 analysed the provisions of articles 44B and 44C of the Transfer and Mortgage of Properties Law, L.9/65 as amended, and focused on the fact that the service of the notice was made directly by a private bailiff without sending a registered letter first. No effort was made previously by the banking institution to serve the notice through a registered letter as provided in the law.
The Court referred to the meaning of the term “service” in article 44IE of Part VIA of the law which provides that service means the delivery of a notice or communication through a registered letter which must be addressed to the last known address of the residence or the registered office of the person to whom it is addressed or the one written in the records of the Land Registry; in the event such service is not possible, the notice or the communication can be served through private service to the person to whom it is addressed. In the instant case, the banking institution did not prove that it proceeded with private service after it had been established that service by registered post was not possible. The Court did not accept the argument of the banking institution that in any case the debtor and the other interested person became aware of the notice, since the specific service, in the way it was made, was not legal as it was not in compliance with the provisions of the law. Consequently, the Court accepted the appeal of the debtor and set aside the notice Type IA and issued an order annulling and setting aside the auction.