Speeches

Launch Of The Lagos Home Ownership Mortgage Scheme Housing Arbitration Rules And The Lagos Homs Official Website

Sep 12, 2011 - One of the promises made at the inception of this administration was to develop a Scheme for the provision of affordable housing to the people of Lagos State. We have since embarked on this project and in the next few weeks, we will steadily unveil the modalities for the operation of the Lagos Home Ownership and Mortgage Scheme ("Lagos HOMS").

The objective of the Lagos Home Ownership Mortgage Scheme is to design a vehicle that will help make the dream of owning a home achievable. The Scheme will thus provide equity funding on the platform of mortgage financing for the purchase of homes, whereby applicants will become proud owners of their own homes upon the payment of an equity contribution not exceeding 30% of the price of the housing unit, with the balance payable over a period of 10-20 years from the commencement of the mortgage.

The Scheme is primarily designed for "First Time Buyers" ("FTBs") i.e applicants entering into the home ownership market for the very first time.

Naturally, Lagos HOMS will be regulated by certain rules of pre-qualification, all of which will be available on the website I will launch today. These will include a sworn buyer's affidavit attesting that the applicant does not own a property anywhere within the territory of Lagos State, proof of employment (salaried or gainful self-employment), residency in Lagos State, and of course evidence of tax payment.

Any false deposition in the buyer's affidavit will be a ground for re-possession and this will be without prejudice to other criminal sanctions that may be imposed by law.

Similarly, applicants will be required to execute a Contract of Sale and a Deed of Mortgage. These documents will govern the transaction and set out the rights and obligations of the parties. Details of these have been captured in the Lagos HOMS policy document which will be available at the formal launch of the Scheme in the next few weeks.

The Lagos Home Ownership Scheme will be launched with the pool of housing stock presently available to the Lagos State Government. More housing units will be offered for sale under the Scheme as they are completed.

We have also designed a structure whereby the Lagos State Government will collaborate with named partner banks for the provision of funds to support applicants in the acquisition of homes, as well as for the management of the pre-qualification procedure. All these details will also be available when the Scheme is formally launched.

Today, we commence our presentation of the Lagos Home Ownership Scheme with the launch of two crucial parts of the Scheme - the Lagos HOMS official website, from which much of the information on the Scheme will be obtainable, and the Housing Arbitration Rules.

This is the first in a series of events that will lead to the flagship formal launch of Lagos HOMS in a short while. Between now and then, the website will be uploaded with all the necessary and relevant information to help prospective buyers under the Scheme make an informed choice.

By the date of the formal launch of Lagos HOMS, applicants will have the choice of downloading all the forms from the website and visit the partner banks only to submit completed documents.

Apart from its aesthetic layout and the ease of navigation throughout the website, an interesting feature of the website is the mortgage calculator, which will enable prospective applicants to calculate the quantum of their income that will go towards settling their mortgage payments.

As part of the Lagos HOMS policy, all disputes arising under the Scheme will be resolved by arbitration governed by the Lagos HOMS Housing Arbitration Rules. These Rules have been passed by the board of the Lagos Court of Arbitration to assist in the resolution of the very foreseeable disagreements that are a permanent feature of human endeavour and commercial transactions.

You will re-call that we recently passed a Tenancy Bill into law which has some revolutionary provisions that dispensed with many technicalities that made recovery of premises from defiant and defaulting tenants extremely difficult.

The damage that these archaic technical provisions did to our economy and in particular to compound the already challenging problem of housing was unquantifiable.

It was a major dis-incentive to housing investors who over time found other investments for their money instead of housing provision.

It was also the reason why many landlords resorted to mitigating their recovery risk by demanding multiple years rent in advance. And of course, it added to congestion in our courts.

Hopefully many of these will now be history with the new Tenancy Law, but we are not stopping there.

That is why we resolved to provide an alternative platform for recovery of premises delivered by Government through the Lagos HOMS policy.

This is an innovation which we hope will ensure that disputes that arise will be treated expeditiously efficiently and cost effectively. The cost of arbitration will be limited to 2% of the purchase price of the property, and will be shared equally between the parties. To further save costs, arbitration will be conducted by a single arbitrator and in cases where it is appropriate, by the submission of documents only.

This will significantly reduce the time within which disputes are resolved, as will the short hearing procedure, which is limited to a one-day hearing and shall be adopted where there is no need for oral evidence to be adduced.

The adoption of these Housing Arbitration Rules for disputes arising from mortgage transactions under Lagos HOMS has been incorporated into the Contract of Sale, the Deed of Mortgage and other legal documentation that applicants are required to execute as a condition precedent for participating in the Scheme.

Parties thus agree to adopt the Rules in resolving their disputes from the outset, and consequently accept that the arbitrator's decision will be final and binding on the parties.

All proceedings will be conducted under the supervision of the Lagos Court of Arbitration ("LCA") applying the LCA Lagos HOMS Housing Arbitration Rules. These Rules have been carefully drafted by the board of the LCA in very clear language to make them easy to understand by parties, counsel, and interested members of the public.

Brief and succinct, the Rules are divided into 15 clauses which contain provisions for the procedure to be adopted from the commencement of proceedings to the delivery of award.

Let me make it clear that our preference for arbitration as the sole means of resolving disputes under this Scheme is by no means a "vote of no confidence" in the courts. Rather, it is an acknowledgment of the fact that not all disputes need end up in court, particularly those that can easily be lawfully resolved in other ways.

It is also an acknowledgment that the relative flexibility afforded by the party-driven nature of arbitration, lends itself most creditably to disputes of this kind. This is an experiment which we hope will be replicated in several other areas of human enterprise as it will bring the much needed succour to our over-burdened courts and further expose the society to alternative, and equally effective, dispute resolution mechanisms.

Ladies and gentlemen, I am convinced that the operation of these Rules will bring about the comfort and confidence that will inspire Lagosians to sign up for the Scheme when it is launched.

It is therefore my distinct pleasure to launch the Housing Arbitration Rules of the Lagos Home Ownership Mortgage Scheme, which shall be known and cited as the LCA Lagos HOMS Housing Arbitration Rules, as well as the Official Website of the Lagos Home Ownership Mortgage Scheme, whose address is www.lagoshomsgov.org.

I thank you all for your attention.

Eko o ni baje o!

Babatunde Raji Fashola, SAN
Governor of Lagos State