A Trapped Buyer Could Not Stop the Bank's Auction

A buyer who had paid more than half the price of an off-plan flat in 2011 and 2012 tried to undo the bank's auction of the whole plot, on the ground that he had filed a trapped-buyer application five days before it. On 9 September 2026 the Court of Appeal refused to give him interim injunctions. It held that the trial court had gone too far in deciding the constitutional question at the interim stage, but that the buyer lost anyway, because binding case law had since held the trapped-buyers provisions he relied on unconstitutional.

The developer's mortgage was on the land before his contract, and it was the mortgagee bank that sold the plot.

What happened

The developer planned a block of flats on a plot it owned. On 5 August 2011 the buyer signed a contract for flat 201, at a price of €247,826.08, and on 29 August 2011 he deposited it at the Land Registry for the purposes of specific performance. When he did, the Land Registry told him that the plot already carried a 2008 mortgage and a 2011 charge. By 21 February 2012 he had paid €130,272.96.

In June 2015 another bank appointed receivers over the developer's assets. In 2017 the mortgagee bank served notices for a debt of €1,329,038 secured by the 2008 mortgage, and fixed an auction for 13 November 2017.

On 8 November 2017 the buyer filed an application at the Land Registry as a trapped buyer, asking for the mortgage to be deleted and the flat, which had not been completed, transferred to him. The auction went ahead five days later, and the plot was sold to three bidders for €358,000. When the bank applied in 2018 to transfer the plot to them, the Land Registry found the buyer's application pending, and in June 2019 wrote to him that there was no separate title for the flat, that the plot had been sold at auction by the mortgagee, and that his application would be set aside unless within thirty days he produced a court order directing otherwise.

He sued, and on the same day applied for injunctions. The Larnaca District Court refused them. In September 2024 the plot was registered in the names of the three bidders, a third each.

The argument

The buyer's case was that the auction was void from the start. Part VIB of the Transfer and Mortgage of Immovable Property Law, 9/1965, which Law 139(I)/2015 added, set up the trapped-buyers mechanism, and section 44ΙΘ(2) provided that, where the conditions in its paragraphs (a) and (b) were met, any auction procedure was suspended until the buyer's application had been fully examined.

The trial judge decided to examine the constitutionality of Part VIB first. He held that deleting the mortgage amounted to a deprivation of property contrary to Article 23 of the Constitution and to arbitrary discrimination contrary to Article 28, declared Part VIB unconstitutional, and refused the injunctions because the action rested on those provisions.

The trial court went too far

The bidders had raised the constitutional point, briefly but sufficiently, so the trial court was entitled to consider it. The question was how far it could go at the interim stage.

Settled case law holds that a court hearing an interim application should not decide disputed facts or difficult points of law that need full argument, nor leave even the shadow of a suggestion that it has decided the merits. The trial court could, and had to, assess whether the action had a visible prospect of success, and in doing so it could take into account the legislation and the binding case law as it then stood. But in 2019 there was no binding case law on the constitutionality of Part VIB. By resolving the question definitively, the Court of Appeal held, the trial court had in effect settled the rights of the parties, and that should have been avoided.

The trial court was wrong to decide the constitutional question finally at the interim stage. The buyer still lost, because by the time of the appeal the question had been decided by binding authority.

Why the buyer still lost

The buyer asked the Court of Appeal to grant the third injunction, against disposal of the plot by its new owners. That could not succeed because of later case law. In Bank of Cyprus Public Company Ltd v. Director of the Land Registry and others, Civil Appeal 285/2018, decided on 20 June 2024, the Court of Appeal held that sections 44ΙΘ to 44ΚΒ, as added by Law 139(I)/2015, were incompatible with Article 23 of the Constitution and unconstitutional. The buyer had read that judgment as turning only on Article 26, which he had not invoked. The court quoted the passage showing that it turned on Article 23 as well.

The court added that a separate referral on the same question to the Supreme Constitutional Court, Application 1/2024, had ended on 26 June 2024: that court treated the appellate judgment of a few days earlier as a precedent resolving the issue, and held that the conditions for it to deal further with the referral were no longer met.

Previous decisions are, as a rule, binding, and the court saw no reason to depart from this one. The buyer's cause of action rested solely on the suspension of the auction that the unconstitutional sections imposed. His prospects of success were therefore not merely not visible but almost non-existent, and the injunction could not be granted. The court did not examine the remaining grounds of appeal.

The appeal was dismissed. Because the buyer had succeeded on two of his grounds, the court awarded reduced costs: €2,000 to each of four sets of respondents, plus VAT where applicable.

What the court did not decide

The court did not rule on the balance of convenience, on whether the Land Registry's letter should have been challenged another way, or on abuse of process. It said nothing about any claim the buyer may have against the developer, which by the time of the appeal was in liquidation as well as receivership. And it did not mention Law 110(I)/2025, which rebuilt the trapped-buyers mechanism after the 2024 judgment.

What this means in practice

For buyers whose developer's land was already mortgaged when they signed, this judgment applies the 2024 decision to an auction by a prior mortgagee: a claim built on the suspension of auctions in the original 2015 provisions had, on these facts, almost no prospect of success. The buyer here was told of the mortgage when he deposited his contract. The deposit did not prevent the auction six years later, and the application filed five days before it did not undo it.

For buyers with an application that froze in 2024, the route now runs through Law 110(I)/2025, which starts from the consent of the charge holder and gives a court route when consent is refused and the price has been paid in full. It has its own cut-off dates, and it turns on whether a separate title deed exists, or can be issued, for the property. Whether a particular buyer is within the rebuilt mechanism is a question for the papers. Our page on trapped buyers in Cyprus sets out how it works.

For anyone about to buy off-plan, the register shows, before you sign, whether the land is already mortgaged. If it is, a contract review should deal in writing with the lender's release of your unit, and with what happens to your payments if the release never comes.

The trap is timing. Here the Court of Appeal assessed the prospects of the action in the light of case law delivered almost five years after the trial ruling. A buyer who shows that the lower court went wrong can still lose the appeal, and pay costs, if the law has since moved against the claim.

Questions we are asked

Sources

• Adonis Adoni v. K&Y. Theodorou Investments & Construction Ltd and others, Civil Appeal E178/2019, Court of Appeal of Cyprus, 9 September 2026
• The Transfer and Mortgage of Immovable Property Law of 1965, 9/1965, CyLaw
• The Courts Law of 1960, 14/1960, CyLaw

This article is provided for general information purposes only and does not constitute legal advice.

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