Understanding the rules in owning homes through mortgage

Because disputes are inevitable in human and commercial relationships and, frequently, in a mortgage scheme, it is important for home buyers to understand the rules as cases of default often arise which need legal interpretation and settlement.

People who apply for mortgage loans and even tenants in landlords and landladies’ houses ought to know that there are rules which protect as well as others which expose them in the event of a dispute over a property on which mortgage has been taken.

For home seekers who applied for the Lagos State’s homeowners mortgage scheme, the rules are quite clear and the state government says these rules are to be implemented to the letter.

In anticipation that disputes would arise with the full operation and enforcement of its tenancy law, the state government  launched  its homeownership scheme along with housing arbitration rules.

Lagos Home Ownership Mortgage Scheme (LagosHOMS) is a mortgage scheme that affords first time home buyers resident in the state the opportunity to own their homes and, according to the state governor, Babatunde Fashola, the implementation of the mortgage scheme is aimed to give meaning to the tenancy law.

Lagos HOMS, the governor said, is a response to the ever increasing need to provide adequate accommodation for the citizenry, adding that the state government realises the need to assist the citizenry in meeting their shelter aspiration as well as facilitate the creation of long term and sustainable wealth.

He explained at the launching of the arbitration law and the mortgage scheme that the tenancy law is a step towards the homeownership scheme while the scheme is a step towards homeownership with minimum stress.

The governor informed that the Housing Arbitration Rules are aimed to take care of likely and/or anticipated disputes from the implementation of the mortgage scheme.

“The objective of these rules is to provide for fair, impartial, speedy, cost-effective and binding resolutions of disputes arising from the mortgage transactions under this scheme”, he said, explaining that under these rules, each party will have a reasonable opportunity to present its case and to respond to that of the other party. “The arbitrator and the parties are expected to do all things necessary to achieve this objective”, he added.

Supo Sasore, Lagos former Chief Judge and Commissioner for Justice says both the homeownership mortgage scheme and the housing arbitration rules are milestones by the Fashola administration.

Sasore,  the chairman of the committee set up to draft the housing arbitration rules, explains that the committee was set up to formulate policies for the implementation of the mortgage scheme, stressing that both the rules and the mortgage scheme are already being implemented.

He explained that 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 said at the inauguration of the law, 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.

Article 1 of the Rules 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, explaining that 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 party by the parties.

It adds 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, stressing that in allocating costs, the Arbitrator shall have regard to all material circumstances including, among other things, which of the claims has led to the incurring of the substantial costs and whether or not it was successful and the degree of success of each party.

Chuka Uroko