Three of the five laws on foreclosures and the insolvency framework, which were returned by the Presidency to Parliament last month and amended by the Legislature, were signed to enter into force by the President of the Republic Nikos Christodoulides.
At the same time, it proceeded to refer two other pieces of legislation to the Supreme Court, bringing the total number of references to justice on the same issue to six. The final verdict of the Government was communicated through the publication in the Official Gazette of the three laws signed.
It is recalled that the parties accepted the referrals of the specific laws, after having previously made the required changes. Specifically, with the three laws that have come into force, additional tools are given to borrowers to protect their primary residence.
The laws signed
– Law on Courts, DIKO law proposal. With the new legislation, the borrower will have the right to set aside the foreclosure notice, upon application to the Court within 45 days after the notice of the sale.
Specifically, a District Court judge has jurisdiction to hear disputes between a borrower and creditors over the debit balance of the credit facility that has been terminated. At the same time, it may adjudicate other disputes between the two parties arising from the terminated loan agreement, which are related to guarantees, collateral, overcharges and unfair terms and foreclosures. At the same time, the Court will be able to consider an appeal filed by the mortgage debtor or any interested party and issue an order setting aside the foreclosure notice within 45 days of receipt of the "IA" notice.
In case this notice has been sent before the publication of the legislation, the 45 days start counting from the date of entry into force of the law. Under the law, the trial of the merits of cases will be completed within 12 months from the day they are registered.
In addition, the new notice of type "IA" may be served again on the debtor and the interested parties setting aside the notice of sale for 12 months or until a final decision is issued in the pending proceedings. In the event that no final decision is issued and if a new notice is sent, the mortgagee has the right to appeal again to set aside the new notice, if there are reasons, as the Court deems. At the time in question, if the debtor acts in bad faith, the ground for setting aside does not apply.
– Law on Credit Agreements for consumers in relation to real estate intended for residence. The legislation was the product of a law proposal by ELAM. The new legislation prohibits creditors from requiring additional collateral from borrowers when the mortgage on the property secured by the mortgage, combined with the creditworthiness, exceeds the amount of the loan.
– Law on the Insolvency of Natural Persons (Personal Repayment Plans and Debt Discharge Decree), the value of the main residence increases to €400,000. It also removes distortions that create artificial barriers for insolvent individuals, who could fall under the insolvency framework.
References to the Court
The other two legislations, which were reported to the Supreme Court, concern the law proposal of AKEL and the Ecologists, with which debtors would have access to justice for abusive clauses and for the amount of the debt.
The Government referred back the law, as it would affect financial stability with serious repercussions on public finances. The referral was rejected by the Parliament. It also concerns the proposal for a law of AKEL, DIKO and DIPA, which amends the law on the Liberalization of the Interest Rate, which prohibits banks from imposing additional interest in the event that the amount of credit facility due, including interest, amounts to twice the initial debt. The main reason for the petition is the provision for retroactivity. In the referral, it was found that the right to contract freely is violated, since retroactively affects already acquired rights of the contracting parties. However, before the legislation was brought to the Plenary, the Ministry of Finance had agreed to the proposal, provided that it would be applied to new loans.
The new framework
Therefore, of the twelve pieces of legislation approved by the Parliament on April 6, only half will enter into force, while the fate of the rest will be clarified after decisions of the Court as to their constitutionality.
It is recalled that the six laws that are now being implemented, two come from bills and four from law proposals. With the new legal framework for auctions, the debt confirmation mechanism, provided by the Financial Commissioner, for debt restructuring is improved. The Commissioner's decisions up to €20,000 will be binding. for complaints against financial companies, which, in turn, will be able to appeal to Justice even for the substance of the decision.
At the same time, when a property goes under the hammer, it will not be sold below 50% of its market value. In addition, borrowers have the right to set aside the foreclosure notice for 12 months, while banks and credit acquiring companies will not ask for additional collateral from debtors when the value of the mortgaged property covers the loan. Finally, borrowers' rights are strengthened through the insolvency framework.
