Rental vs denial of ownership and other issues
There should be a clarification regarding rent and deprivation of ownership. The question was raised during proceedings in the District Court, in cases where the State, without expropriation etc., has taken ownership of land for more than 30-40 years and the owners have raised the issue of compensation or payment of “rent”.
Our firm’s position, in cases where we have represented the owners, is that we disagreed with the position of Land Registry Dept. that compensation should be based on comparative property rentals in the adjacent or nearby area. Our position is that this is not a matter of a rental that has a beginning and an end, and terms of rental, because the illegal possession of property for such long periods suggests deprivation of ownership.
Unlike the rent in similar cases, there has been no such issue of comparison, but a clear and “illegal” possession by the state for very long periods, which up until the date of the hearing did not end and the owner still does not know when the state will cease control.
This argument is logical, since it is different matter if the owner rents his property for a certain period and another if the owner is deprived of his property illegally and for an unknown period. It is believed that this is similar to cases tried by the ECHR because of property occupation by the Turkish army and where the ECHR adopted a compensation rate of 4% -5% of the market value and not on rate of a rent with ordinary tenants.
To this end, we argued that Cypriot courts should also follow the same methodology for ‘rental’ compensation. But I wonder which owner will renounce ownership (without a date of termination) for a rent of land which admittedly is low for farmland and usually equals a “jar of halloumi” as it works out at around 30 euros a year per donum in the case of wheat, etc.
Unfortunately, the court was not convinced and decided that the correct method of assessment is the rental value on the basis of comparative properties. Although the court decision is respected, we are certainly entitled to have our reservations, as by comparison, Greek Cypriot owners of land in the occupied areas would be entitled to a meagre compensation from Turkey. That is something for everyone to think about.
In another case, again in the District Court, the owner’s ploughed land of 200 donums was expropriated, based on audited accounts and payment of annual income tax, etc., relevant to earnings from that land and thus we adopted the income method based on the audited accounts as filed with the Income Tax Office. There were no similar comparisons of this size of a professional farming business. So, the Land Registry followed the old rule of how much plantations of an area of 2-3 donums are usually rented for, mainly referring to plots owned or operated over weekends on an amateur basis or as a hoppy. The farm in question had a yearly income of EUR 250,000 and was offered 450,000 in compensation. We argued in court that a company that has an annual income of EUR 250,000 cannot be worth 450,000 and asked for EUR 1 mln, based on income plus property value. We presented the relevant case history and precedents, reports by the Ministry of Agriculture, etc., and here the court was convinced that our method was correct and our client received compensation of just over EUR 1 mln.
In another case where there was a requisition for 20 years of a strip of land along a tourist plot, we asked for compensation for the denial of access for the remainder of the plot as that access was under requisition and the rest of the land was not accessible and so we asked for compensation/rent and for the rest of the land. The court was not convinced even though I believe that our approach was very reasonable - as the rest of the land did not have any access.
In another recent case, the Land Registry used comparative data of a different nature and at a distance of 5060 km just to prove its case. This approach was so outrageous that we sent a protest letter to the Director of the Land Registry arguing under the comparative method basis it would raise chaos in the property market. We said that one cannot argue that the Ormideia agricultural estates have a yearly increase since the Limassol lands are taken up by property development. Each expert may have his own different approach, but within boundaries of professionalism and where there are no directly related comparative figures, the expert appraiser will uses his own judgment (hence he is called an ‘expert’), but in such cases, the judgment should be within some sense of logic.
Recently, I raised a very interesting argument concerning rent controls, trying to define when the contract ends and when the law on rents begins. A very interesting legal argument which I will analyse in a future article.
There are all kinds of opinions and often I wonder how a judge could possibly reach a conclusion. I believe that the standard of our judges is at a very high level even if they do or don’t adopt the opinions of experts. Admittedly, there are also property owners who are “greedy” in their demands, causing an additional problem, while in many cases the owners themselves do not adopt the views of their own consultants / lawyers / appraisers, etc.
In the long 36 year history of this office, I have learned that in our sector at least there is a high level of understanding of the judiciary and of appropriate judgments. And perhaps it is the only estate which remains at a high levels and is charged with the protection of the state’s interests.