An agent used a power of attorney signed in 1996 to mortgage the owner's Paphos villa for his own loan in 2009. The Supreme Court held the mortgage void against the owner.
A British owner built a villa at Tala, in the Paphos district, in 1991. In December 1996 he signed a power of attorney allowing a friend, an estate agent, to mortgage the property so that the owner could raise a loan from one named company. That mortgage was prepared and then withdrawn, because the money never came. Thirteen years later, in March 2009, the agent took the same document to the Land Registry and mortgaged the villa for 170,000 euro, to secure a loan made to himself and his wife. The owner was not told. On 2 October 2026 the Supreme Court, unanimously, upheld the Paphos District Court's judgment that the mortgage did not bind the owner and that the lender must release the property.
The point of the case is simple. A specific power of attorney is spent once the act it was given for has been done, and a lender who accepts it years later, for a loan that benefits the agent, takes the risk.
A specific power of attorney ends when its job is done
The lender argued that the 1996 document had never been revoked, so it was still in force in 2009. The Court did not accept that. Under Part XIII of the Contract Law, Cap. 149, a power of attorney creates an agency, and the owner had admitted that this one was given for a single transaction: a mortgage in favour of one company, to raise money for him. When that mortgage was signed on 23 December 1996, the authority was exhausted. It ended because its purpose had been carried out, not because it was revoked, so nothing needed revoking. The owner's formal revocation in April 2009 was, in the Court's words, legally irrelevant.
The Court read the wording the same way. The document allowed the agent to mortgage the property "to any person, organisation or bank" for any price. Those words described who the lender could be. They did not allow the agent to put the owner's home up as security for somebody else's debt. An agent stands in a position of trust and must act for the principal, not for himself. A loan to the agent and his wife, secured on the principal's house, served only the agent, and without clear and express authority it fell outside the document.
The words "to any person, organisation or bank" said who could lend. They did not say whose debt the house could secure.
Why the lender could not rely on the paperwork
The Court accepted the general rule, from Bank of Cyprus Ltd v. Floridi (1999) 1 A.A.D. 508, that a bank is not expected to check with the principal every time an agent produces a power of attorney. Requiring that would make the documents useless. But this was not an ordinary case. The power of attorney was specific, not general. The loan went to the agent and his wife, with nothing coming to the owner. The lender accepted the agent's word that he had rights in the property as a buyer, although the buyer named on the deposited sale contract was a company, a separate legal person. And thirteen years had passed between the signing of the document and its use. Taken together, those facts should have put the lender on inquiry. Its own witness accepted that no thorough checks were made, and said that the lender was not supervised by the Central Bank at the time. The loan was made by a cooperative credit society, and the appeal was brought by its successor, the Cyprus Asset Management Company, KEDIPES.
The lender also argued that the owner was no longer the real owner, because a sale contract in favour of the agent's company had been deposited at the Land Registry in 1996. The Court rejected that too. A deposited contract gives the buyer the right to seek specific performance under Law 81(I)/2011 and an interest in equity, but the registered owner stays the owner until the title is transferred. A lender dealing with the property cannot ignore him.
What this means in practice
The people most exposed are owners who signed a power of attorney years ago, often while living abroad, and forgot about it. The owner here gave his to a friend who was also his estate agent, which is a common way for an owner abroad to get a purchase, a mortgage or a Land Registry step done. This owner won, but the claim was filed in 2010 and the appeal decided in October 2026, sixteen years later. Winning in court is the last line of defence, not the first.
If you gave a power of attorney over Cyprus property, find it and read it. If it was given for one transaction, it should have ended with that transaction, but a third party may not know that. Revoke it in writing, keep proof that the attorney received the revocation, and ask a lawyer to obtain a search certificate from the Land Registry showing every mortgage, sale contract and memo registered against the property. Do that now, not when a bank writes about a debt you never took on.
The trap is to assume that an old document is dead simply because you have stopped using it. A general power of attorney, unlike the one in this case, may still be valid until it is revoked, and the Court repeated that a lender is not ordinarily obliged to call the owner before relying on one. Anything new you sign should name the transaction, the lender, the amount and an end date.
For lenders and anyone who takes security over property through an attorney, the message runs the other way. When the power of attorney is old, when it is specific, or when the loan benefits the attorney rather than the owner, contact the owner before the mortgage is registered.
Our property team carries out the Land Registry checks described above, and our litigation practice acts where a mortgage or sale has already been registered without the owner's consent.
Sources
- Cyprus Asset Management Company Ltd v. Graham Robert Ball, Civil Appeal 195/2017, Supreme Court of Cyprus, 2 October 2026
- The Contract Law, Cap. 149, CyLaw
- The Sale of Immovable Property (Specific Performance) Law of 2011, Law 81(I)/2011, CyLaw
This article is provided for general information purposes only and does not constitute legal advice.
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