Amendment of the Finance Leasing Law
By: Harris Kyriakides LLC
On 05/06/2020, the Parliament adopted the amendment of the Finance Leasing Law of 2016 (72(I)/2016) (the "Law") with 29 votes in favor, 14 against and 2 abstentions. The purpose of the aformentioned legislation is to provide a regulatory and supervisory framework in relation to the operation of financial leasing companies, that are providing leasing services to the public.
The said amendment regulates issues related to the termination of lease of movable and immovable property, as well as cases in which movable property is the subject of financial lease and the lessee refuses or is unable to deliver the property to the lessor after the termination of the lease.
The main amendments of the Law are summarized below: The definition of the word "leasing" has been replaced by Article 2 of the Law with the following definition: Leasing, means a contract of any kind, which also includes electronic contract, relating to the lease of property, by virtue of which the lessee may acquire the property by paying the agreed, fixed or variable or periodic or otherwise payments. Article 33 of the Law was amended by replacing paragraph (4) with a new paragraph which separates the time frames in which the lessee may find another buyer for the lease in case of termination of the financial lease.
In particular, the new Article 33 (4) provides that in the event of termination of the lease by the lessor, the lessor must set a period of time, not less than two (2) months for real estate and not less than one (1) month for movable property, within which the lessee may find another lessee or buyer for the lease. Furthermore, a reservation is added on the basis of which in case the lessee finds a new lessee or buyer as above, the new lessee is subject to the lessor’s approval.
The addition of 5 new paragraphs to Article 33 (5) of the Law. The Law stipulates that: in case the lessee is asked for the delivery of the lease property to the lessor and the lessee refuses, then the lessee may submit an ex-parte application to the Court requesting the issuance of an order for delivery of the lease. The Court may issue an order for the delivery of the lease to the lessor, which shall be executed by a bailiff thirty (30) days after the service of the order to the lessee, unless the lessee gains an order for the cancellation or suspension of the execution of the delivery order within the above deadline. in case the lessee is asked to deliver the lease to the lessor and the lessee does not have it under his/her possession and/or control, the lessee is obliged to inform the lessee in writing about the location of the lease, within ten (10) days of receipt of a written request from the lessor. In case of non-identification of the lease or its destruction, the lessee is liable to pay damages to the lessor. the lessee who violates the obligation under paragraph (e) of the said article commits an offense and, if convicted, shall be punished by imprisonment of up to three (3) months or has to pay a fine of maximum €855,00 or by both penalties, unless the lessee proves that he does not know where the lease is or does not have it under his/her control, for reasons and/or circumstances for which he/she is not responsible.
The Court may order the lessee to inform the lessor in writing of the place where the lease is located. in the case of motor vehicles, the Road Transport Department must transfer the motor vehicle to any buyer if the transfer form is submitted to the Department, duly signed by the lessor as well as the aformentioned court order and an affidavit of the court bailiff confirming that the order has been served, provided that thirty (30) days have elapsed from the service of the said order to the lessee and a decree for its cancellation or suspension has not been submitted to the said Department. Τhe Law has not yet been published in Government Gazette hence the enforcement date is unknown. A detailed update shall be issued as soon as there are further clarifications. For more information please contact our website microsite on Banking & Finance or contact Ms Georgina Athanasiou at firstname.lastname@example.org.