Q&A – 21 November 2011
Property sold before mortgaged
The bank of which I am legal counsel, lent an amount in excess of Usd 1M to a client who had provided his title deed to the bank to be mortgaged and kept as a security. This was a term loan of 4 years to be paid six months after disbursement. After we got the title deed, we did a search and were assured through the search report that the mortgage could be registered. We disbursed the funds to the client whilst we proceeded to register the mortgage. To our utmost surprise we are unable to register the mortgage since the Registrar of Titles informs us that the property has been sold. We are also informed that the title in our possession is not the original title but a mere duplicate. The client has defaulted in his first payment and the new owner of the plot is unwilling to discuss any settlement with us. What should we do?
OO, Dar
First as bankers you have been very reckless. It is a Banking 101 principle that you should not disburse funds without proper perfection of securities. You did a search of the property but should have also done a physical verification of the title deed. The abnormality that the title is a duplicate would have come to your attention during physical verification of the document and alerted you not to disburse. You did not do that. Another process that you could have done is filed for a certificate of deposit of the original title deed pending registration of mortgage. You also did not do that. Without protecting your interests you went ahead and disbursed amounts to the client (we are unsure whether we call him a client or fraudster).
What this client has effectively done is disposed off the title before you could secure the loan. He has hence received payments from both you and the new buyer, leaving you helplessly exposed.
Your question is what should you do? Unless you can prove mischief by the new buyer, it is very unlikely you can recover from him. He is correct in not being willing to discuss with you- why should he discuss with you for a sin he did not commit? We do not blame this new owner.
You have a cause of action against the borrower against whom you should file a suit. Our experience is that this client of yours has perhaps already vanished and even if you win the suit, which is likely, you will have no avenue to execute. If possible you should also consider filing a caveat on the property. Your Attorneys can guide you further.
Landlord a nightmare
I have leased a property from a landlord who is a very old man and emotionally attached to the property he has leased to us. He walks into the compound whenever he wants. Initially we could tolerate it but it is now getting out of hand. The entire roof of the property is also leaking which he says we must repair as it is not stated in the lease that it is his responsibility. What can we do?
DE, Dar
The Land laws of Tanzania are clear in that in every lease there shall be implied covenants by the lessor with the lessee binding the lessor that so long as the lessee pays rent, you are entitled to peaceful and quiet possession of the property. This walking into the compound is in breach of this implied covenant and you can consider sending him a lawyers notice and also proceed to Court should the behavior not change.
The Land Law is also clear in that the lessor has to keep the roof and main walls in good repair. Hence the law comes to your protection in that it is clearly his responsibility and not yours.
Traffic police stopping at night
Can a traffic police stop anyone at night? Is this not in breach of security? What if the traffic is a fake officer? How do I prove his identity? I was also recently held by police officers for driving slow. Is there such a law? What should I do?
MB, Dar
There is no law that prohibits a traffic officer from stopping you at night. We are also unsure why you say it would be a breach of security. It would infact lead to lawlessness should there be no police roaming the roads at night.
Your question is perhaps geared at the risk of an attach should the person stopping you at night be a fake police officer. This is not easily answerable. It is indeed true that of recent there have been instances of fake police officers stopping cars and we understand your concerns.
Our position is that if you are stopped by a police officer late at night, and you are concerned that it might not be a genuine police officer and you decide not to stop, you should go report yourself immediately to the nearest police station. The police station has its network of finding out which police officer is on duty where and at what time.
As for the driving at a slow speed, the law is clear in that if a driver of a motor vehicle drives a vehicle at such unreasonable low speed as is likely to cause obstruction to traffic on the road or annoyance to the other road users is guilty of an offence and must pay a fine.
You have also asked us what you should do if there is a law that disallows driving at such low speeds as to cause traffic; our simple answer is to try and drive a little faster or get someone who can do that for you. You must remember that road traffic jams are very bad for the economy at large and the law tends to protect that.