Safe purchase of property through auction

 Safe purchase of property through auction

by George Coucounis

“The buyer of a property through auction is considered bona fide and safe”

THE process of selling a property through auction as well as its transfer, according to the provisions of the law, is completely legal and valid and the purchaser acquires a good title and replaces the previous owner in the ownership rights of the property. As a bona fide purchaser, he can exercise his rights, having the right, in case the previous owner still resides or possesses the property, to demand from him to cease trespassing in the property and to deliver to him its free and vacant possession. If the previous owner does not comply, the purchaser as the new owner of the property who acquired it through the auction in good faith and for valuable consideration, is entitled to claim the delivery of its possession. In fact, he can file an application for a summary judgment of the court, since the conditions are met and the previous owner has no rights to the property. Any such proceedings previously pursued against the mortgage creditor and dismissed, constitute an additional obstacle which creates a presumption of regularity for the legitimacy of the auction process. The property right of the previous owner ceased to exist with the sale of the property in auction and its registration in the name of the purchaser as the new owner.

The purchaser of a property that acquired it in auction had a problem with the previous owner of the property which was mortgaged in favour of a banking institution and he continued to live in the property, refusing to deliver its possession. The banking institution on the basis of the mortgage, activated the forced sale procedure under Part VIA of Law 9/1965, which resulted in its sale and registration to the purchaser. The previous owner unsuccessfully sought stay of the proceedings through an application for an interim order, as well as the cancellation of the auction procedure and the suspension of the transfer of the property to the new purchaser to whom the auction was awarded. The purchaser as the new owner filed a lawsuit and an application for summary judgment for the delivery of the possession of the property and the District Court of Nicosia in a judgment dated 4.2.2021 issued orders in his favour for recovery of possession and for trespass against the previous owner.

In particular, the purchaser supported the regularity and legality of the auction process under which he acquired the property, a fact that was confirmed by previous court decisions in the context of proceedings filed by the previous owner. He also argued that the previous owner had been barred from pursuing any defence proceedings for the legality of the auction and that the filing of a memorandum of appearance was intended to delay the proceedings and that he did not have any bona fide defence, confirming his actionable right. The previous owner claimed that the auction was conducted in violation of explicit provisions of the law and that there had been only one bidder, while he was not allowed to submit a bid and that no legal or statutory valuation was made, as well as that the notice of the auction was not notified or published properly.

Examining the application in the light of the legal principles that govern the application for summary judgment, the court ruled that the facts of the case were such that they allowed it to exercise its power and issue a summary judgment on the remedies claimed by the purchaser as the owner of the property. In the court’s assessment, it was clear that the previous owner did not have any defence on the part of the purchaser’s claims for delivery of possession of the property, having purchased it in the auction. The validity of the auction process and the transfer of the disputed property in the name of the purchaser was ascertained by the court in the context of applications/appeals of the previous owner. The fact that he filed an appeal does not constitute an obstacle to the success of the purchaser’s claims and cannot therefore outweigh the outcome of the auction and the transfer of the property to the purchaser.

The court indicated that the purchaser correctly stated that under the circumstances he is a bona fide purchaser, as he acquired ownership of the property through a lawfully conducted auction as established by the court. The facts relied on by the previous owner could not be a valid ground of defence regarding the purchaser’s claims for the issuance of the orders to lift the illegal trespass. Consequently, the court issued the orders claimed by the purchaser and gave the previous owner 21 days from the service of the order to him to comply.