The content of Type IA notice to a mortgagor

The Type IA notice must state the amount due and the amount interest, not the interest rate

A mortgagor whose mortgaged property is in danger of being sold at public auction is entitled to be informed of the exact amount of debt they must pay, when they are served with a form IA notice. It is not sufficient to record the amount due and the percentage interest rate.

The IA notice is the second notice served on the mortgage debtor, after the first, which gives him a period of 45 days from the date of service of the notice to pay the required amount. In the notice, in addition to the information regarding the name and address of the debtor, the mortgage, the land registry and the details of the property, it is recorded that the mortgagor intends to proceed with the sale of the mortgaged property at a specific place, date and time with the auction process as provided for in Part VIA of the Transfer and Mortgage of Immovables Act of 1965 (9/1965).

The most important thing is to record the amount that became due under the mortgage, plus the amount of interest and costs.

Interpretation of Type IA notice

A difference of opinion arose before the court of appeal regarding the interpretation of the contents of the notice under Type ‘IA’. Specifically, whether the notice should record the exact amount required and the amount of interest due, rather than the percentage of interest.

The majority decision issued by the court in C.A.83/2019, dated June 11, concerned an appeal by a mortgage debtor against a first-instance court’s decision that rejected his appeal against the setting aside of the notice under Type IA and the intended mortgage auction of his property. An issue was raised by the debtor that the notice was not in accordance with the prescribed formula because it did not state the amount of interest but a percentage of interest.

In its decision the court of appeal said that from the prescribed Type IA, it follows that the legislator intended that reference should be made to the amount that became due, by virtue of the mortgage, to the amount of interest instead of a description of the interest, as well as the amount of expenses. This is inferred from its relative provision.

After all, this is also consistent with the logic that, in the context of the Type IA notice, the amount due for the intended sale has already been specified on a specific date. The possible addition of subsequent interest does not negate the above.

This finding, the court said, in addition to the clear legislative provision, is also supported by the different intention of the legislator in what was determined to be required in the Type I notice, where, the structure with regard to the interest is as follows: “[number] plus interest [number] to [number] per cent as of [date].”

Conclusion

The court of appeal judged that it is not the job of the court to interpret the intention of the legislator with what it considers it should be. The matter cannot be reduced to a matter of formality, since that is what the law provides for. Non-compliance with the form is grounds for setting aside the notice under Form IA.

In this case, it stated, as appeared from the relevant notice, which concerned the mortgage debt, it referred to an amount that became due under the mentioned mortgage and the amount of expenses, but regarding interest gave a description of how to determine it, without specifying the amount.

The right of the mortgagor to request clarification, or the possible argument that the amount of interest was calculable on the basis of the notice, it added, does not negate the specified content of Form IA, nor the obligation to comply with it. Nor, of course, does it remove from the debtor the right to challenge said non-compliance, as grounds for setting aside the notice under Form IA.

The court concluded that, inevitably, on the basis of the aforementioned legislative provisions, the notice served did not meet the required conditions, according to the prescribed form and content. A consideration that what is mentioned in the notice, by itself or in combination with anything else, satisfies the requirements, would modify what the legislator clearly intended. It therefore set aside the first instance court’s decision.

George Coucounis is a lawyer specialising in immovable property and the founder of George Coucounis LLC, based in Larnaca, coucounis.law@cytanet.com.cy, Tel: 24 818288