http://www.testosteronepit.com/home/2011/10/29/another-eurozone-country-bites-the-dust.html

“The bulk of the problems stem from the archaic Ottoman land law still in existence in Cyprus which allows these dubious practices,” writes the Cyprus Property Action Group. Insufficient industry regulation and lacking enforcement of consumer protection laws also play a role.

The scheme works this way: A developer takes out a mortgage on the land but hides it from foreign buyers. The bank retains the title deed as collateral. When the developer sells the property, the buyers’ lawyer, who is in cahoots with the developer, doesn’t perform a title search and doesn’t “discover” the original mortgage. Buyers, assuming that their part of the property is free an clear, either pay cash or take out a mortgage. The developer pockets the money instead of paying off the original mortgage. The bank goes along because it can collect interest on one or two mortgages. But it retains the title deed as collateral for the original mortgage, and the buyer never sees it.

Amazing, really.