Wednesday 19 October 2011

Arbitration and ADR for Landlords and Tenants in The Bahamas

Arbitration

 

The law of real property goes back an extremely long time.  The Bahamas is presently in the midst of proposed property law reform, which will revolutionise the law relating to land ownership and title.

Property law is complicated, but if you are involved with property you need to know the rules.
  • Arbitration - A means of resolving disputes using an independent arbitrator as opposed to a court of law.
  • Often used for lease contract disputes, rent reviews etc.

The Courts & Property Dispute Resolution  

 

The courts are one means of resolving disputes between individuals, companies and landlords and tenants, but they are not necessarily the most effective, particularly where the parties previously enjoyed and may well want to continue to enjoy a close working relationship. 

The main problem with the court system is that it is primarily an antagonistic process: it pits one party against the other in order to determine ultimately a winner and a loser. 

As a consequence the court system tends to emphasise and heighten the tension and conflict between the parties as each tries to show the other in the worst possible light, rather than trying to reach an amicable compromise.

Alternative Dispute Resolution (ADR)  

The courts themselves recognise the effectiveness and increasing importance of alternative means of resolving disputes, and indeed judges will sometimes suggest this course of action prior to a court hearing.

What is Arbitration 
 
This is a procedure where the parties to a dispute refer the issue to a third party (usually an expert in the field) for resolution rather than taking the matter to the law courts. 

Section 3 of the Arbitration Act 2009 states:
  • The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.
  • The parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest.
Your lease agreement may make provision for disputes arising between landlord and tenant to be dealt with by arbitration as opposed to a court of law, and usually specify how the arbitrator is to be appointed.

If one party seeks to start a court action in the face of a prior agreement to arbitration, the other party can request a stay of litigation from the court. If, on the other hand both parties opt for court action the arbitration agreement can be ignored.

There are limited rights of appeal after an arbitration decision is made and may only be allowed at the discretion of the courts on a point of law.

The court has the power to order a party to comply with an order of an arbitration tribunal.

In general the courts have no objections to individuals settling their disputes by voluntary means such as arbitration though they are careful to maintain their supervisory role.

Arbitration agreements are no different to other forms of contract and as with other forms of contract law disputes the courts will strike out any attempt to oust their ultimate jurisdiction as being against public policy.

Both parties to an arbitration dispute will be jointly and severally liable for the costs and fees involved.

The Advantages of Arbitration: 
  • Privacy - Arbitration tends to be a private procedure so outsiders do not have access to sensitive information and the parties do not have the risk of bad publicity arising from newspaper reports.
  • Informality - the proceedings are much less formal that a court case and scheduling is often more flexible.
  • Speed - The process is usually much quicker that a court case. However, if one party decides to challenge the decision through the courts then the process will be ultimately longer and greater in cost.
  • Expertise - The person appointed is usually someone with expert knowledge of actual practice in the filed, whose decision should reflect this.
  • Cost - Arbitration is usually a much cheaper process. However, the cost of expert's fees should not be underestimated.

The Advantages and Disadvantages of Arbitration 

  • Lower cost
  • Accessible
  • Expert knowledge of their particular subject 
  • Balance
  • The no-costs rule and lack of legal aid penalise poor litigants, although they do keep costs down.
  • The procedure means that if you do not know what you are doing the arbitrator will help you.
  • Arbitrators’ local knowledge can be beneficial.
  • They help reduce the workload of the judiciary.
  • They reduce the workload of government departments.

How are Arbitrators Controlled 

  • Judicial review
  • Appeals are to the Supreme Court on points of law
This is for your information only and nothing contained in this Memorandum is intended to constitute a legal opinion.  If you require any detailed advice you may contact an experienced Bahamian arbitration attorney by clicking here.
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Sunday 2 October 2011

What laws in The Bahamas protect me from bank reposession?

The recent economic downturn has led an increase in the number of people who are unable to maintain their mortgage repayments on their homes. This has led to an increase in the number of home repossessions. Lenders have the right to repossess your home if you have defaulted on your mortgage payments. However, there are laws in place to protect borrowers from actions of unscrupulous lenders. Lenders are not entitled to repossess a home immediately. They should try to resolve the problem with you first and only use repossession as a last resort.  Lenders must notify you of your mortgage arrears and request that you pay them within a certain time, or by following a schedule of repayment.  At this point lenders will appreciate your communication with them and they may agree to a repayment schedule that is practical for you and your financial situation.  If you have been sent a demand for payment, a banking law attorney can outline your options.

If you fail to respond to the lender’s initial requests, they will typically notify you of their intention to sell the property.  This is not the only remedy a Lender has in these kinds of circumstances, however, it is definitely the most commonly used as it allows the Lender to act without having to seek an Order of the Court.

When the Lender seeks to exercise its power of sale over the property, the Lender is under certain responsibilities.  Firstly, Lender is under a duty to realise the best possible purchase price for the property - however, because they also have a desire to clear their account/arrears as soon as possible, there is a risk that the property will be sold under value. This will be at your expense.

Prior to repossession, you should secure two independent surveyors valuations or sales particulars from real estate agents, including the asking price.
 
You should then take the following steps:
  1. Do not trash the property or leave it in a messy/unclean state. Treat the property as if you were trying to sell it yourself for the best price. Every extra penny you get will be to your future benefit.
  2. Make an enquiry with the lender to confirm the date that their real estate agent was instructed (if you think the agent is unsuitable - for example they are not local or they specialise in a different sector of the property market, tell the lender in writing).  In a lot of cases Lenders will market the properties by listing them in the newspapers.  They will list the property usually by stating the appraised value.  You may wish to obtain your independent appraisal to verify the appraised value and you should notify the Lender of your intention to do so immediately.
  3. If the listing price is way below value, set out your concerns in writing. Note - do not demand that the property be listed at an unreasonable level, especially in a cool housing market - it will take longer to sell, and your liability for mortgage will simply increase while the interest on your loan continues to accrue.
If you believe your home is about to be repossessed, you are advised to seek legal advice as soon as possible.  An expert attorney will be able to inform you of your options and may be able to negotiate with your Lender to find an alternative solution.

Disclaimer

While we have made every effort to provide accurate information, the law is always changing and affects each person differently. This information is no substitute for specific advice about you personally and we will not be liable to you if you rely on this information.If you require specific advice you can contact us by clicking here.