Rental vs de­nial of own­er­ship and other is­sues

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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