April 28 (Bloomberg) -- Thousands of property investors may be in danger of losing vacation homes in the northern part of Cyprus after the European Union’s top court ruled that a Greek Cypriot can reclaim land once owned by his family.

The European Court of Justice in Luxembourg today said that a judgment from the Republic of Cyprus in the south ordering a U.K. couple to demolish their house must be recognized by EU countries even if it concerns land in the northern part of the island.

The plaintiffs, Linda and David Orams, invested 160,000 pounds ($234,600) in a holiday home in Lapithos, a region in the north occupied by Turkish troops since 1974. The case, which has bounced from courts in Nicosia to London to Luxembourg, has implications for many of the 22,000 foreign investors, mostly from the U.K., said Marian Stokes, the founder of a group that advises owners of homes in the region.

“It’s absolutely gutting,” said Stokes of the Homebuyers’ Pressure Group. “It’s so sad, because people stand to lose so much money.”

The Orams’ lawyer, Hasan Vahib in London, didn’t respond to a request for comment.

The ruling may be used as evidence by Turkish-Cypriot nationalists to bolster claims that the EU is not acting in an even-handed manner, said Hugh Pope, Turkey-Cyprus project director at the International Crisis Group, a conflict management advisory agency.

‘Legal Limbo’

“Unfortunately this is a natural consequence of the legal limbo which we’re in following the EU’s decision to bring in Cyprus in a most unsatisfactory way in 2004,” Pope said in a telephone interview from Istanbul.

Cyprus, which has been divided since 1974, entered the EU in 2004, represented by the Greek Cypriot government in the south. Turkey is the only country to recognize the northern part, called the Turkish Republic of Northern Cyprus since 1983, where it keeps about 30,000 troops.

Turkish Cypriots on April 19 elected a party that opposes efforts to reunify the island, creating an obstacle for United Nations-sponsored peace talks. Turkey and Cyprus had been negotiating an end to the 35-year division under UN auspices since September.

Cypriot Foreign Minister Markos Kyprianou said the EU court ruling was based on legal arguments and not swayed by political considerations.

The ruling confirms “the jurisdiction of Cypriot courts,” he said.

2004 Ruling

A Cypriot court in 2004 ordered the Orams to tear down their property in the northern part of Cyprus, return the land and pay damages to Meletis Apostolides, an architect whose Greek Cypriot family originally owned the land.

Apostolides applied to have the judgment recognized in the U.K. which would allow him to seize the couple’s assets. He argued that since the U.K. and Cyprus were both EU member nations, the ruling was enforceable across the region.

Cyprus, a British colony until independence in 1960, is split between the Republic to the south and the self-declared Turkish Republic of Northern Cyprus that resulted from the Turkish military occupation. Turkey invaded the northern third of the island in response to a brief Greek Cypriot coup aimed at uniting the island with Greece.

In southern Cyprus, a decade-long construction boom and an under-resourced planning administration have created a bottleneck of 65,500 owners awaiting title deeds to the properties they purchased. Some have waited for years to receive their title deeds.

The case is C-420/07 Apostolides v Orams.

To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

Last Updated: April 28, 2009 12:06 EDT