By the nature of the Nigerian property and mortgage market where owning a home through mortgage is not given, buyers scarcely bother themselves with understanding the risk in taking a mortgage loan and defaulting in paying back the loan. That explains why terms like arbitration in mortgage business means so little to people looking for homes to buy.
In other economies where the mortgage system is fully developed and functional, it is almost the only means of owning homes. In Nigeria, homeownership is largely through individual or household savings from very low income.
Though it is on a very low scale, people still take mortgage as a source of housing finance in which case they are involved in a form of business transaction that has to do with borrowing and lending.
Like in any other business transactions and, indeed, human and commercial relationships, disputes are inevitable. Frequently, in a mortgage business, cases of default arise that need legal interpretation and settlement.
People who want to buy homes, especially those that apply for mortgage loans and even tenants in landlords houses ought to know that there are rules which protect and also expose them in the event of a dispute on a property which mortgage has been taken.
In Lagos State, for instance, a good number of residents who want to own homes have applied for the state’s mortgage scheme called Lagos Home Ownership Mortgage Scheme (LagosHOMS) which has been modified into Rent-to-Own housing scheme by the current administration in the state.
But that initiative which was the brain child of the Babatunde Fashola administration served as a model mortgage scheme where the rules guiding mortgage loan were well spelt out even though those rules were violated in some cases.
In anticipation that disputes would arise with the full operation and enforcement of its tenancy law which was put up as an accompaniment of the mortgage scheme , the state government launched its homeownership scheme along with housing arbitration rules.
The launching of the arbitration law, the mortgage scheme and the tenancy law were a step towards the homeownership scheme while the scheme is a step towards homeownership with minimum stress.
Housing Arbitration Rules are aimed to take care of likely and/or anticipated disputes from the implementation of a mortgage scheme.
The objective of arbitration rules is always to provide for fair, impartial, speedy, cost-effective and binding resolutions of disputes arising from the mortgage transactions under this mortgage scheme. Under the rules, each party in a mortgage transaction will have a reasonable opportunity to present his case and to respond to that of the other party. The arbitrator and the parties are expected to do all things necessary to achieve that objective.
Supo Sasore, former Chief Judge and Commissioner for Justice in Lagos State, explained at a housing forum in Lagos that homeownership mortgage scheme and housing arbitration rules of the state were milestones by the state government.
Sasore who was the chairman of the committee set up by the state government to draft the housing arbitration rules for the state recalled that the committee was set up to formulate policies for the implementation of the mortgage scheme.
“The rules are to be read in conjunction with the Lagos State Arbitration Law 2009, hereinafter called the Arbitration Law 2009 or any other law agreed to, and the Deed of Mortgage entered into by the disputing parties with common expressions having the same meaning.
“Words that are not defined by the Arbitration Law 2009 or the Deed of Mortgage shall be given legal meaning”, he says, adding that after the arbitrator has been appointed under these rules, the parties may not, without the Arbitrator’s agreement, amend the rules or impose procedures that conflict with them.
He cited Article 1 of the Rules which says the Arbitrator shall have the power to resolve all disputes arising from the mortgaged property or the Mortgage Deed in a fair and just manner, adding that, subject to the agreement of the parties, the agreement to arbitrate under these Rules is mandatory and irrevocable.
Request for, and commencement of arbitration as contained in Article 2 of the Rules stipulates that a party to a mortgage under this scheme who, in accordance with the Mortgage Deed wishes to have a dispute resolved under these Rules shall deliver to the executive secretary of the Lagos Court of Arbitration a written request for arbitration setting forth the facts that have given rise to the reference to arbitration.
The Rules make provisions for award of costs by the Arbitrator, and subject to any agreement between the parties, the cost of arbitration shall be pegged at two percent of the value of the purchase price to be shared in equal part by the parties.
The Rules add that subject to any agreement between the parties, the Arbitrator shall have the discretion to award the proportion of the cost to the costs of the arbitration that each party shall bear.
It stresses that, in allocating costs, the Arbitrator shall have regard to all material circumstances including that have led to the incurring of the substantial costs and whether or not it was successful and the degree of success of each party.
Source: Businessdayng
