David and Linda Orams from Hove, Sussex, spent their life’s savings on their dream villa and pool after buying land in the Turkish part of the divided island in 2002.
But the original owner of the land, who fled to the south when Turkey invaded in 1974, took court action against the couple.
This resulted in judgments in the Nicosia District Court in the Republic of Cyprus ordering the immediate demolition of the villa, pool and fencing.
They were also ordered to give back the property to the original owner, Meletios Apostolides, and pay him damages.
The court ruling could affect thousands of other holiday home owners in northern Cyprus who bought land which once belonged to Cypriots who fled after the invasion.
Constantis Candounas, the solicitor representing Apostolides, said after the judgment was delivered: “This creates a new legal framework in those cases where foreigners are trespassing on such properties. But each case must be decided on its own particular facts.”
Architect Apostolides commented: “This is a very good and a just decision.”
The three appeal judges rejected argument by the Orams’ legal team at the hearing in November that the President of the European Court of Justice (ECJ), Judge Vassilios Skouris, could have been biased when the Luxembourg court ruled the British courts must enforce the Cyprus legal decision.
Speaking from her home, Ms Orams said she did not know how the judgments would be enforced in the Turkish-controlled part of the island. “We will have to have a lot of discussions with our lawyers before coming to any conclusions.”