UGANDA, Kampala | Real Muloodi News | In Uganda today, the price of a home is often far greater than the amount of money most households save. As a result, mortgages allow individuals and families to purchase a home. Owning a home is an achievable goal. You can do this by making a small down payment, such as 20% of the purchase price, and getting a loan for the balance while putting a lien on the property being mortgaged.
Continue reading to discover how this can become a possibility.
A recent Ugandan High Court decision, Sendagire Stephen and Nanyombi Gladys versus DFCU Limited, Kabiito Karamagi and Kirumira Godfrey Kalule HCCS No. 26 of 2008, put forward commendable requirements for a mortgagee to exercise their right to sell mortgaged land upon failure of the mortgagee to remit his dues.
In his decision, the judge emphasised the relationship between banks and the customer, basing on trust and confidence, with a duty of care and mutual benefit. There are common rules to safeguard the interests of both parties in this relationship.
There is no absolute right of the mortgagee to sell the mortgaged property; the duty cautions it to exercise care in the following ways;
(i) The mortgagee should act honestly and get the best price in good faith. He should never sell under a forced sale value arrangement or at a lower price. The property must be valued before the sale to establish the current market value at the date on which the sale is intended.
(ii) In case a mortgaged property is taken under receivership by the financing institution due to default of payments, information has to be clear in terms of bids proposed by intended buyers, so that if the highest bidder is offering over and above what the financial institution wants then the rest can be given to the mortgagor hence pleasing both parties.
(iii) The sale of the property should be advertised after the mortgagor has been notified.
(iv) The sale of the mortgage property has to be by public auction and a private treaty should conduct no sale without the prior consent of the dependent bank. Despite most people preferring formal statements, selling of mortgage property has to be carried through the bidding process, which is recommended as it is more competitive and transparent.
(v) Sometimes, mortgaged property has movable property, such as furniture and fittings, livestock among others. In such an event, the movable property should be valued, and the money given back to the mortgagor.
Sale by mortgage is the most common means of debt recovery in Uganda. It is therefore important that all parties involved in the sale of property get it right from the start. They should know what protects them from liability by emphasising good faith, transparency and involvement of the mortgagor at every step of the sale.
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