The interim decision was issued in the context of a lawsuit by the mortgaged debtors against the Bank, in which the mortgaged debtors sought, among other things, judicial decisions declaring the mortgage as invalid and unenforceable, as well as its cancellation and deletion by the Court, and the declaration of any foreclosure proceedings regarding the mortgaged property as unconstitutional, invalid, and illegal.

CLAIMS OF THE MORTGAGED DEBTORS

1. The mortgaged debtors claimed that the contested mortgage was established unlawfully and in violation of the provisions of Articles 5, 8, and 21 of the Law on the Transfer and Mortgage of Property (N.9/1965), resulting in it being considered invalid. Specifically, the mortgaged debtors pointed out terms of the Mortgage Agreement to support their position that it is not valid and, consequently, that the first two conditions of Article 32 of the Courts Law (N.14/1960) are met, concerning the existence of a serious issue to be adjudicated, with good chances of success.
2. Regarding the third condition of Article 32, concerning the irreparable damage that would be suffered if the requested order were not issued, the mortgaged debtors argued that, if the Bank proceeded with the foreclosure of the mortgaged property, they would lose their status as owners of the mortgaged property, and consequently, their claim regarding the contested mortgage would become moot. In contrast, the Bank would not suffer any damage, as it would only delay the initiation of the sale of the mortgaged property, without losing its status as a mortgage lender.

REBUTTAL OF CLAIMS BY THE BANK

In rebuttal to the claims of the mortgaged debtors, the Bank argued that the application is not supported by facts or claims indicating a visible likelihood of success in the lawsuit of the mortgaged debtors, and that the Mortgage Agreement was signed freely and with the consent of all parties, without specific references to the legality of the terms of the Mortgage Agreement. Furthermore, the Bank claimed that any damage to the mortgaged debtors could be addressed with monetary compensation.

COURT DECISION – PROHIBITION OF THE INITIATION OF FORECLOSURE

After completing the hearing process, the Court ruled that the mortgaged debtors demonstrated that they have more than just a mere possibility of success, primarily based on their position that the Mortgage Agreement contains terms that render the secured amount, interest, and expenses, undefined and indeterminate, as well as that the Mortgage Agreement provides for their liability for amounts, interest, and expenses not related to the amount secured by the mortgage.

Most importantly, the Court found that in this case, both the status of the mortgaged debtors and the status of the Bank as a mortgage lender is in dispute, which is a fundamental condition for the Bank to proceed with the foreclosure of the mortgaged property.

Given these specific facts, the Court concluded that if the requested order is not issued, the damage that the mortgaged debtors would suffer would be irreparable. This is because if the Bank began the sale process of the mortgaged property and foreclosed it, the mortgaged debtors would lose their status as owners of the property, and their claim regarding the mortgage would become moot. In contrast to the damage suffered by the Bank, which would merely be the delay in initiating the foreclosure process.

Author: Andreana Loizides