- Mortgagees may repossess and sell mortgaged property following a valid default in Jamaica.
- Wrongful repossession before a proper default has been declared exposes lenders to legal liability.
- Lenders must obtain a fair market valuation and act in good faith when selling repossessed property.
- Under-value sales that destroy the mortgagor’s equity may be challenged in court.
- Borrowers facing repossession should seek immediate legal advice and not vacate without legal advice.
The power of sale vested in a mortgagee under Jamaican law is a powerful remedy, but it carries with it significant obligations. A mortgagee who exercises the power of sale must do so in good faith, must take reasonable steps to obtain the true market value of the property, and must apply the proceeds in the order prescribed by law — paying off the mortgage debt and returning any surplus to the mortgagor. Where a lender acts in breach of these obligations — by selling at a gross undervalue to a connected buyer, by taking possession before the contractual conditions for repossession are met, or by failing to provide proper notice to the borrower — the borrower has legal remedies, including an action for damages and, in appropriate cases, an application to set aside the sale.
Abusive Repossession Tactics and How They Manifest
Documented abusive repossession tactics in Jamaica have included the use of intimidation and physical pressure to induce occupants to vacate premises before a legal order for possession has been obtained; the appointment of receivers who act in the interest of the mortgagee rather than impartially managing the property for the benefit of all parties; the commissioning of valuations from assessors who have a relationship with the mortgagee and who systematically undervalue the property; and the sale of repossessed properties to connected buyers at prices that eliminate the mortgagor’s equity entirely. In some cases, these practices have been compounded by the failure of attorneys acting for lenders to advise borrowers of their rights, or by the use of mortgage documentation that obscures the conditions under which repossession can lawfully occur.
Borrower Rights and Practical Steps
A borrower who receives a repossession notice or who believes that a lender is taking steps to repossess their property should seek legal advice without delay. An attorney can assess whether the default has been properly declared, whether the notice periods and procedural requirements of the mortgage have been complied with, and whether there are grounds for an injunction to prevent the sale from proceeding. Borrowers should not vacate a mortgaged property in response to informal pressure from a lender or its agents without first obtaining legal advice, as voluntary vacation can affect their subsequent rights. The Financial Services Commission regulates deposit-taking institutions and mortgage companies and can receive complaints about the conduct of regulated lenders. Where the conduct of a lender or its agents amounts to harassment or criminal trespass, the Jamaica Constabulary Force should also be notified.
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