With the aim of upgrading the real estate disposal process, which for years was a mechanism that was difficult for the general public to access, with limited transparency and low participation, the Cypriot mortgage property management market has entered a new era over the last five years, with the digitalisation of auctions at the forefront.
Physical auctions were often accompanied by obstructionism, fear and practices that prevented the creation of a truly competitive process, while the physical presence of interested buyers constituted a substantial obstacle, since those who could not attend were excluded from the process, regardless of their interest. However, with the implementation of the electronic system, the market has been transformed into an open and accessible process.
The advantages
As mentioned during an informative presentation by the Association of Cyprus Banks and ACB E-Auctions on the electronic auction platform, participation no longer requires physical presence — internet access via computer, mobile phone or tablet is sufficient — while the ability to use a mobile allows participation from places outside the office or home, expanding both the geographical and demographic range of interested parties.
The registration and certification process has also been digitised. For tax residents of Cyprus, identification is fully automated via CyLogin, while the security deposit can be paid by debit or credit card. Also crucial is the elimination of human intervention during the execution of the auction, as the process is entirely controlled by the system, which enhances credibility and prevents any doubts about influence or irregularities.
Additionally, the electronic format has made it possible for individuals or legal entities from all over the world to participate.
Responses to complaints
According to representatives of the Association of Cyprus Banks and ACB E-Auctions, the transition to the digital environment was accompanied by several misconceptions. Some believed that electronic auctions were conducted “secretly” or addressed to a “closed circle”. However, the electronic archive records 10,000 registered users, while the platform’s public presence is also possible through social media and paid advertisements, with the aim of informing the public. At the same time, the law requires the publication of auctions 45 days before the execution on the website of the Ministry of Interior, in two newspapers with nationwide circulation, on the websites of mortgage lenders and on the ACB E-Auctions platform.
Regarding public complaints about difficulty in participating in the process, they explain that in practice the process is completed in five steps, while detailed written instructions, educational videos and telephone support are provided. Also, the perception that “everyone does what they want” is refuted by the existence of a strict legal framework that precisely defines roles and procedures, as well as by the automation of execution without human intervention.
The legal and procedural framework
Electronic auctions are conducted under the Ministry of Finance's 'Sale of Mortgaged Property through an Electronic Auction System' Decree of 2019. Of particular interest are the provisions for the debtor, for whom, in addition to the right to attend and participate in the auction of his own property, a preferential right of purchase is provided for him and his first-degree relatives at the last auction price, provided that it is a primary residence worth up to €350,000.
The framework also requires that the transfer takes place exclusively to the successful bidder and only after the Electronic Auction Report has been filed with the Land Registry.
Numbers and data
Available data demonstrates the maturation of the process, with the system counting approximately 10,000 registered users from Cyprus and abroad, while audience analyses show that those aged 35–44 constitute the largest group of interested parties, with Limassol, Nicosia and Paphos as the top cities of participation.
Digitalisation not only affected the form of the process but also its essence, since the number of potential bidders and the final prices in favour of the debtor increased, while, at the same time, phenomena of violence and intimidation that were recorded in physical auctions have disappeared.
Even more interesting is the impact on out-of-court negotiation. According to the data, almost 36% of scheduled auctions are suspended mainly due to an agreement between the lender and the debtor. This means that the mechanism does not only function as a disposal tool, but also as a lever for achieving arrangements, contributing to the distribution of incentives and the reduction of non-performing loans.
From the physical process to the digital one
It is noted that the Parliament voted to conduct auctions by electronic means in 2018, while, following the relevant Ministerial Decree, the first auctions were held in December 2019. The pandemic in 2020–2021 accelerated the abandonment of physical procedures, while from 2022 all auctions are now held electronically.
ACB E–Auctions LTD, which is a 100% subsidiary of the Association of Cyprus Banks, was created in 2019 and its main activity is the management of the Electronic Auction System, which was designed to be fully compatible with the Sale of Mortgaged Property through the Minister of Finance's Electronic Auction System Decree of 2019.
(Source: InBusinessNews)
