Liberia: Justice Gbeisay’s Ruling In Mortgage Agreement Sparks Controversy Among Banking Institutions
MONROVIA – Sources within the country’s banking sector have hinted FrontPageAfrica about meetings being held by commercial banks in response to a recent ruling by Justice Yamie Gbeisay in a case involving a Liberian landlord and Labanese Lessee.
By: Henry Karmo [email protected]
The ruling, according to sources, has sent commercial bankers into shock as serious questions are being raised for the banking sector regarding the issue of hundreds of millions of dollars in loans that are secured by mortgages.
According to one banker who asked for anonymity, the judge’s ruling suggests that borrowers who have offered their properties to banks are free to do anything with those properties.
“At the end of the day, whatever is done will not be honored even in foreclosure,” the source said.
In the case involving the Liberian landlord and Lebanese lessee, Justice Yamie Gbeisay ruled that the lease has done after the mortgage is superior to the mortgage.
When contacted, Mr. Molley Kamara, the Liberian Landlord, said: “Naturally, I am disappointed, but the specific ruling does not only impact me. Commercial banks in Liberia have over $200M secured by mortgages.
“All of that is at risk. These banks are the bedrock of the economy. If they are affected, it means the economy will grind to a halt. Because of those implications, my lawyers have asked me to remove myself from the matter. In short, the case is now between Kafel and his very “creative and magical” lawyers and the commercial banks. What I can discuss however is the fact the lease is at best fraudulent. That’s not a case before the court. Nonetheless is depicts the dangers of the ruling,” he added.
According to court records, in July 2021, Mr. Morley Paul Kamara purchased a real property through foreclosure involving IBLL. After purchasing the property, the new owners met the lessee with the view of continuing the leasehold but were shocked to learn that the lease was for $20,000 a year and for a period up to 2041.
First, the lease was executed after the mortgage agreement with IBLL. Secondly, the property, which is located on the beach side of 17th street, has 10 apartments, with residents paying a minimum $24,000 per year per apartment, and would easily lease for at least $100,000.
Further complicating the matter, the current lessee (Kafel) participated in the initial auction process through a proxy and even personally met the CEO of IBLL on the matter. During all this period he did not disclose a lease agreement, FrontPageAfrica has gathered.
“In today’s market, the property with over 10 apartments located on 17th street rents for over $100,000. Many believe that Mr. Gbedze, a once wealthy and astute businessman, now deceased, would never sign such a lease.
The educated guess is that the deed was fraudulently done after his death and backdated. Upon learning of the ‘dubious’ agreement, Mr. Kamara requested the banks (who sold the property) lawyers to ask the Commercial Court to evict the occupants.
When the Writ of Eviction was filed, the leaseholder, Mr. Mohammed Kafel’s lawyers filed a petition for Adverse Claim suit with the Commercial Court.
Kamara’s disappointment
According to Kamara, in 2018, he interacted with Mr. John Gbedze, now deceased, almost daily. “He (Gbedze) was not desperate in 2018. Yes, he mortgaged several properties and even sold a few properties to me, but none was undermined by another lien of this nature.
“What’s happening in this case about the lease is criminal. Secondly, I have never met a tougher negotiator than Mr Gbedze. But, he was not a criminal. So, I know if that compound was vacant, Mr. Gbedze would never had leased it for $10K.”
“These so-called Lebanese are claiming that Mr. Gbedze leased this compound with 10 apartments located on 17th street for $10K per year. If this doesn’t ring criminal to your ears, then I don’t know what would! In short, there’s an abundance of evidence that the lease was criminally done,” he added.
“But that’s not what’s before the court. Who rents a $1.2M compound for $10,000 a year? It would take you 120 years to recover the value. This is the sort of thing these Lebanese would do and yet get Liberian lawyers to force the law in their favor as if the law is malleable.
“It is about the sanctity of a mortgage, the inherent value of a mortgage, which is to provide security to the lender is defiled, one lawyer added. “If I can mortgage a property and do anything later and those things will be superior to the predated mortgage, then a mortgage is a dirt. My question is, how you control moral hazard or the perverse incentive for a defaulting person to undermine the mortgage in a scenario like this.”
Everywhere in the world, this is controlled by surrendering your original deed.”