After months of debates the Cyprus parliament passed on the 6th of September the controversial foreclosures law.
The government had been committed to its international creditors to pass this law and according to the Memorandum of Understanding between the parties. Passing this law was a necessary condition for the lenders of the country to release the next tranche of 436 Million Euros.
The new law seeks to streamline bank foreclosures of bad debts. This law aims to reduce the time required for the process of foreclosures from several years to just a few months. The current system allows creditors to cause unnecessary delays to the process by objecting to the reserve price set by the Land Registry or by filing to Court a number of different applications which are believed to merely seek to delay the process. But this new law seeks to makes sure that foreclosures cannot be delayed without a good cause and provides for new procedures for the valuations and auctions of properties. Moreover, the law does seek to protect the rights of the debtors by allowing them to appeal estimated valuations and it also puts pressure on banks to attempt to restructure loans before deciding to proceed with repossessing homes.
The parliament decided that this law will not come into effect until the government submits a separate bill on insolvencies. That bill would provide for the treatment of specific groups of individuals based on their ability to repay their debts and it is expected to help mitigate the effects of the foreclosures law.