A buyer took a housing loan for an off-plan maisonette that was never finished. The Supreme Court held he still owed the bank, which paid on engineer's certificates.
A buyer agreed in 2008 to buy a two-bedroom maisonette, still to be built, in a project in Deryneia. He financed the purchase with a housing loan of 95,680 euro. The bank paid the developer 87,600 euro in stages. The house was never finished and never handed over, and the buyer stopped paying his instalments. On 16 June 2026 the Supreme Court held that he still owed the bank.
His case was that the money had gone to the developer, not to him, and that he owed nothing for a house he never received. The documents he had signed said otherwise.
What happened
The buyer's own evidence was that he agreed the purchase with the developer in about February or March 2008. The sale contract was signed on 29 April 2008. The loan agreement carried the date 31 March 2008 at its head and 26 May 2008 after the signatures. On 28 May 2008 he assigned to the bank all his rights under the sale contract as security for his obligations to it, and the loan was also secured by a mortgage over the land on which the developer was to build the project.
On 26 May 2008 he wrote to the bank. The letter authorised it to make drawings from the loan account to pay the contractor, on presentation of certificates from the project's architect or supervising civil engineer for each stage of the works. It also said that the bank had no responsibility to confirm the content of those certificates, and that the practice would continue until the loan was fully drawn.
The bank paid the developer 87,600 euro in total. The buyer paid his instalments at first and then stopped. The bank terminated the account after letters with which he did not comply, and sued both the buyer and the developer. The claim against the developer was not part of the appeal.
The trial court gave judgment against the buyer, in favour of Bank of Cyprus, for 70,630.15 euro plus interest, together with declarations that the bank was entitled under the assignment to the maisonette and could sell it towards the debt. The respondent on the appeal was Themis Portfolio Management Holdings Limited. The judgment does not explain how the claim came to it.
Why the buyer was bound
The buyer denied that he had ever been a customer of the bank, and said the loan had been arranged by the developer. He also attacked the two dates on the loan agreement. The court rejected both points. It is a basic rule of the common law that a party is bound by a document he has signed, and the court quoted Pittas v Bank of Cyprus (2007): once a person accepts his signature, he is bound unless he succeeds on a defence such as non est factum or that his signature was obtained by fraud. The buyer accepted that he had signed the loan agreement and the documents that went with it. Two dates on the agreement did not make it void, and who had arranged the loan did not affect the validity of the transaction.
The bank's obligation was to release the amounts certified by the project's engineer. No term required it to see the house finished.
What the bank had promised, and what it had not
The buyer's main argument was that the assignment had in substance put the bank in his place as purchaser, so that it was responsible for seeing the money used to finish a house mortgaged in its favour. Since the house was never finished, he said, the loan agreement had been frustrated and he should be released.
The court read the loan agreement, the assignment and the letter together, and held that their meaning was clear. The loan agreement allowed drawings under the sale contract "on presentation of certificates from the project's supervising engineer for each stage of the works". The letter said the bank had no responsibility to confirm those certificates. Clause 9 of the assignment said that it did not affect the remaining obligations of the buyer and the seller under the sale contract, and created no obligations for the bank beyond those it expressly set out. Where the terms of a contract are clear, the court said, it has no power to disregard them, or to hold void an exclusion of liability the parties agreed.
So the bank's obligation was limited to releasing the amounts certified by the supervising engineer, without examining for itself whether the certified work had actually been done. A bank employee had said in evidence that he did not know who the project's supervising engineer was. That made no difference: there were certificates signed by a supervising engineer, and no evidence that the person who signed them was not the project's engineer. There was no term obliging the bank to secure completion and delivery of the maisonette. The buyer, for his part, was obliged to pay his instalments, and the termination followed his default.
A point on which the Supreme Court disagreed with the trial court
The trial court had treated the clause in the letter as an exclusion clause and found it onerous. The Supreme Court did not share that view. The term appeared both in the loan agreement the buyer signed and in the letter he sent, and the assignment preserved the parties' obligations under the sale contract. A bank's obligation to make drawings according to the engineer's certificates, it held, cannot be described as onerous.
That disagreement did not change the result. The trial court had limited the judgment to the value of the work actually done, on the evidence of a valuer that the buyer did not challenge, and the bank had not cross-appealed against that limit. The court did not say what the figure would have been without it. The appeal was dismissed with 3,000 euro in costs plus VAT, if any.
What this means in practice
For anyone financing an off-plan purchase with a loan, the loan and the sale are separate bargains. If the developer stops building, your contract with the bank does not stop with it. On documents like these, the developer's failure is a matter between you and the developer, under the sale contract, and the bank is entitled to its instalments. Whether the purchase should depend on the loan being granted in the first place is a different question, which we covered in the finance clause in a property contract.
Read the payment authority before you sign it. The letter in this case was a few lines long and decided the appeal. It let the bank pay the developer on the engineer's certificate alone and told the bank it need not check. If you sign something similar, you are relying on the engineer, so it is worth knowing who the supervising engineer is, asking for a copy of each certificate as it is issued, and visiting the site yourself. A contract review before signing covers the sale contract and the documents the bank will ask you to sign alongside it.
If the project has already stalled, stopping your instalments does not put pressure on the developer. It puts you in default with the bank, which can terminate the loan, claim the balance with interest, and rely on the security you gave it. The claim that matters is the one against the developer under the sale contract. Our page on trapped buyers sets out where buyers in that position usually stand.
The trap is the argument that feels strongest: that you owe nothing for a house you never received. The court's answer was that the buyer had signed each document, their terms were clear, and none made the bank answerable for the house being finished. Where the documents say what they said here, that argument will not release you from the loan.
Questions we are asked
The developer never finished my house. Do I still have to repay the bank?
On facts like these, yes. On 16 June 2026 the Supreme Court held that a buyer who had signed a housing loan, an assignment of his sale contract and a letter authorising payments to the developer was bound to pay his instalments, even though the maisonette was never completed or delivered. His obligations under the sale contract, and the developer's, stayed between the two of them.
Did the bank have to check the work before paying the developer?
Not under these documents. The loan agreement allowed drawings on presentation of certificates from the project's supervising engineer for each stage, and the buyer's own letter said the bank had no responsibility to confirm what the certificates said. The court held that the bank's obligation was limited to releasing the certified amounts, without examining for itself whether the certified work had actually been done.
Does assigning my sale contract to the bank make the bank responsible for completion?
Not by itself. The buyer argued that the assignment put the bank in his place as purchaser, with control over the project. The assignment said that it did not affect the obligations of buyer and seller under the sale contract and created no obligations for the bank beyond those it expressly stated. The court found no term obliging the bank to secure completion and delivery.
I signed the loan through the developer and was never a customer of the bank. Does that help?
No. The court held that it made no difference to the validity of the transaction that the developer had arranged the loan, since the buyer had signed the loan agreement himself. Relying on Pittas v Bank of Cyprus, it repeated that a person who accepts his signature is bound by the document unless he establishes a defence such as non est factum or that the signature was obtained by fraud.
The loan agreement carried two different dates. Is it void?
Not for that reason. It bore the date 31 March 2008 at its head and 26 May 2008 after the signatures. The court held that this did not make the agreement invalid, reasoning that the loan had evidently been approved before the sale contract was signed, since the buyer's own evidence was that the sale had already been agreed.
How much did the buyer have to pay?
The trial court gave judgment for 70,630.15 euro plus interest, a figure limited to the value of the work actually done, as assessed by a valuer whose evidence the buyer did not challenge. The Supreme Court left that figure in place, noting that the bank had not cross-appealed against it, and dismissed the appeal with 3,000 euro in costs plus VAT, if any.
Sources
This article is provided for general information purposes only and does not constitute legal advice.
Klitos Platis
Advocate, Partner
Kleanthous & Platis LLC, Nicosia · Published 26 September 2026
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