For some it has been a difficult year! As a new year approaches all business people must keep in mind their statutory obligations and seek to meet them.
When you are in business paying taxes is very much a part of the enterprise. However there are some obligations which you may have a tendency to forget:
If you own an international business company please remember that the annual return must be filed by December 31, 2016
If you are an International Business service provider you must renew your licence by the same date.
If you have a domestic (ordinary) company of any kind please remember that there is now an annual return to be filed with a penalty of $10.00 per day. There are some who might not have met this obligation in 2016. If so penalties would be accumulating so this needs to be addressed immediately.
Penalties are now being enforced for failure to notify the corporate registry of any fundamental changes to the company.
All those involved in certain businesses and professions such as lawyers, real estate agents and hairdressers must apply for a renewal of their licence by the end of January 2017.
For those who are members of non-profit companies please remember that the requirement to file financial statements will now be enforced.
Know Your Customer procedures for gate keepers are also being enforced. Gate keepers are not simply financial institutions but includes lawyers, accountants and real estate agents amongt others. Broadly speaking one must be conscious of ensuring that one is not a part of a larger money laundering, financial crime or terrorist scheme.
Most of us do not ever venture into a Court unless we are a part of the Justice System in Barbados – maybe a lawyer, police officer or probation officer.
While efforts have been made to upgrade the Courts they are essentially functioning under the same physical constraints as they have been for decades.
One still approaches the Court to find people sitting on benches or standing outside the Court until they are ushered in. Some benches now have back rests but some still do not. Perhaps the Courts are intended to be an unwelcoming place because the intention is to make one uncomfortable with the visit.
Who is likely to be there
(I sometimes think however that our infrastructure reflects who we expect to use it, and thus the stark contrast between the van stand and the international airport – but that is merely a random thought. )
The Magistrate’s Court has both a civil jurisdiction of no more than $10,000.00 with some exceptions such as wrongful dismissal and a criminal jurisdiction, thereby seeking to address many of the small but not unimportant issues plaguing the society.
Individuals are often seen at their most desperate and their most vulnerable. Some manage to catch a glimpse of what it is like for those whose existence in our society are predetermined to be solitary, poor, nasty, brutish, and short.
For every charge or grievance there is a societal issue which has lead to the appearance before the Court. And arguably the appearance marks a failure of the society to deal with that set of circumstances adequately.
The underlying social issues
Assaults might stem from relationships within the community which have soured whether they be relationships between spouses or between friends.
Disputes might occur over maintenance because parents do not understand their parenting role or their understanding might be clouded by anger over the failure of the relationship.
A debt in the past which would have been forgiven between friends becomes a matter for the Court because friends consider themselves wronged somewhere along the line in the friendship – maybe a falling out over a woman.
Then there is the passing parade of those involved in minor criminal activity. Many of them young men under 25 years of age – the future of Barbados. Magistrates offer words of warning, words of reason with the certain knowledge that quite often those who appear before them will appear once again, older, with more serious crimes.
Underpinning all of this is that many of our Citizens have mental problems which just like physical problems will get worse if not treated.
All of these matters come before the Magistrate who over time comes to recognise the human emotions layered beneath the cold bedrock of the law.
Can the Court adequately address these underlying problems?
The Magistrate’s Court is a good barometer if we wish to examine the struggles of ordinary people. It is clear that some individuals need help. Probation officers are on hand, recourse is made to investigations and reports on the family as well as reports to inform sentencing. There are some rehabilitation and counselling programmes which are available, some run by government and some which are private.
Relatively new tools have been introduced such as the Domestic Violence (Protection Orders) Act Cap. 130A and the Penal System Reform Act Cap. 139 which give the Magistrate more and better options in dealing with those who appear before him.
And yet we have not done enough.
What is to become of the individuals in now forced relationships who have the responsibility of raising children when they have not themselves come to terms with their own problems?
What is to become of the hundreds of boys and young men who appear before the Court on a monthly basis?
Should community disputes however small require the engagement of the full armament of the judicial system?
It is now normal for there to be a public outcry fuelled by social media when there is some tragic event. But the truth is we do not pay very much attention when the symptoms first appear either as individuals or as a society.
Seeking new solutions
For those who agree that more should be done and that there should be more effective solutions, it will be a daunting task to recalibrate the thinking of the majority to the view that those who appear before the Courts could benefit from earlier interventions and evaluation, monitoring and support after trial.
Since we are no longer our brother’s keeper – let it be said too that weightier interventions and more effective programmes would make the society better for us all.
So you have defaulted on your mortgage despite everything I’ve told you. I’m sorry to hear that, but it happens.
Many people fall short of their obligations or simply fail. Look at Donald Trump. He had all those bankruptcies and is now a billionaire running for President of the United States.
This is what this post is about. The important thing is not that you messed up but how you handle messing up.
I know many of you look at your house and see the time and energy you put in. You can say why you picked that hideous colour for the feature wall and still laugh when you recall Junior’s mishap with the gardening tools on your parquet floors. It is an emotional investment. I get it.
However, you really should also remember that you entered into a business deal. Yes, every mortgagor is a businessperson. The mortgage really came about because you wanted to invest in property, whether for its own sake, or for your family, or for a space to live. Some even pay their spouse’s or friend’s gambling debts or go on a world cruise because their next door neighbours won’t shut up about theirs – called investing in experiences (YOLO!). The Bank wanted to invest in your loan in the hope of getting a substantial, reliable return. So you both are partners, the Bank bringing the seed money.
Now, in this mind-set look at your options. First, you need to reassure your partner you’re still good for the return before it demands all its money and gets out of the venture. As I’ve said previously you have a couple things in your favour: one, the Bank (Mortgagee) will do its best to keep its investment if there is any hope you can still pay, and two, the Bank can usually forgive defaults if you rectify it in a timely manner.
Therefore, the first thing you do is call your partner, the Bank, via your liaison officer, explain why you are in default and say when you can rectify it. I know you may think that she does not know, so why draw attention to yourself? This thinking is from 1827, as if your mortgage account involves a dusty ledger and an accountant with undiagnosed dementia who checks it once a year. No. This is the twenty-first century. It’s all automated now. The day after the system does not see your payment, or you didn’t submit that insurance certificate or you missed a loan payment on some other facility, a report is generated that shows up from her supervisor to as far as a certain northern parent company who is wondering if its investment in you is suspect and if it should cut its losses before the shareholders find out. If the Bank takes too long to issue a notice to you, the officer in the parent company may actually call or email that poor liaison officer and make sure she calls, writes or emails you. So not only will you be showing you are honest and trustworthy by calling her first, you will be making her life easier as well, which makes people more disposed to giving you a little ease. If you handle it right, most likely you and the Bank will stay partners well into the future.
If you’re saying you really can’t pay, that you’ve lost your job and cannot find another or have become disabled and you can no longer pay for the multi-million dollar condo at Rockley Resort you still owe a king’s ransom on, then that’s where it gets complicated.
Well, the prudent, obvious thing is to dissolve the business before you incur further losses. In this case you put the property up for sale and move in with your parents. Sorted.
Or, you could rent it out and then move in with your parents. That way you can still pay your mortgage and get some income as well. But get permission from the Bank first. You most likely agreed to do this in your contract.
I hear what you’re saying: your parents’ house is cramped, you’re comfortable, you love your house and besides, the Bank is rich and they can wait on the money. They are making loads of interest on you, after all, so why would they be stressed?
Don’t forget, this is a business transaction. The Bank was sitting there, minding its own business, when you walked in and pitched them on a wonderful opportunity and now it’s looking sour. Your partner is going to do what any prudent businessperson will do; try to get out before its losses are too great and the shareholders sue for incompetence.
Okay, now you are crying about leaving your travertine tiled floors that you installed yourself and feel the Bank should understand. Why? The Bank never agreed to be your friend. The longer you linger in the house the interest is increasing and eroding the worth of your house (the equity) and the Bank’s ability to recoup the sum you owe. It’s a serious matter, especially if you both stand to be saddled with a balance on a loan that the both of you will spend years into the future trying to pay or collect, annoying if you really can’t pay.
Still, you’re saying you’d rather die than give up your custom kitchen. They’ll have to drag you screaming from your double ovens. Sadly, this means your partner will have to enforce the mortgage contract.
The next thing that will happen is that your matter is assigned to a lawyer ($$$). The lawyer will send you what is called a “Statutory Notice” (Notice). Because of the Property Act CAP 236 of the Laws of Barbados, several provisions are implied into your mortgage unless you agreed in your mortgage contract to specifically discard them. One provision is that a formal notice must be sent to you, demanding that you pay all the money due to the Bank under the mortgage, or the Bank will sell your land/house/condo. The law says the Bank can only proceed one month after you receive the Notice, which you probably agreed can be deemed served by registered post to your last known address. So, no, you can’t just shut all the windows and hide.
If your land is without a house on it, the bank can conceivably hold an auction the day after the expiry of the wait time. They won’t do that, however, as under the same laws they have a duty to act in good faith and find the best market for your property at that time. To treat it as though it were selling its own house. So they have to drum up interest by advertising, seek professional valuations to make sure that they know the value of the land. However, once they’ve done their best they can sell it to whomever makes an offer they will take. They are not required to wait for a better market or offer.
However, if there is a house on the land, the above still applies, but the assumption is that persons are occupying the house. So an application required by law (Property Act) is made to the court to gain possession. This application came out of equity (principles of fairness the court adheres to that are not strictly law but are almost as good as) because you both have already agreed that the sale would happen if you can’t pay.
Basically, so that Mortgagors do not “lose” their homes willy-nilly, they are given an opportunity to make their case to the court if they believe that they can redeem the mortgage (pay back everything to the Bank, now including its legal expenses) or remedy some other default in a reasonable time rather than have to move out. What should happen is that the Court examines if this is just wishful thinking or not. If not, they are given a reasonable time under the circumstances to pay or deliver up possession, either by adjourning the matter to a later date or by a possession order which is suspended a few months to give you time to pay. If there is no reasonable prospect of redemption then the order for possession should be granted. The order now gives the Mortgagee access to the court’s organs for the enforcement of its order i.e. the Bank can now have the court’s marshals come and remove you, even screaming, and now you still have to go live with your parents. (Actually the marshals do work with you. They’ll explain they have to execute the Writ of Possession and say when they’ll be back to put you out, by which time you should be ready to just hand over the keys, or else…)
So, wouldn’t it be easier to avoid all that?
What you should do when you take out a mortgage is have a plan for when the business deal doesn’t pan out, like you would for a hurricane or a fire. There is no shame in it.
I guess, what I am really saying is, depending on how you handle the situation… you could be Donald Trump!
A lot of people love the idea of having a mortgage. Basically you pay the Bank – from whom you have borrowed the money – until you can say that you own a “piece of the rock” (property).
A lot of people barely read the contract that they sign. I know someone that complained about her lawyer making her read the document, lamenting that she was paying this person all this money, holding her up when all she wanted to do was move in and now they want her to read this long set of writing.
So, I thought I would point out what you are signing when you sign a mortgage contract if your only motivation is to get that niggly detail out of the way so you can get your hands on the cute four bedroom with double vanity sinks in the master bathroom, walk in closet, chef’s kitchen and devastating views.
“This Deed of Charge by Way of Legal Mortgage”
A mortgage is a fancy name for a loan given by a lending institution, usually a Bank or Credit Union, in exchange for a security i.e. something valuable it can sell to get back its money if you can’t pay. It can be land, shares or a chattel house – once you own it and they are willing to use it as security.
In Barbados, for mortgages over land, rather than transfer the ownership of the property to the lender until you have paid in full, you register a Charge by way of Deed i.e. a signed and sealed formal document which is recorded against your land at the Land Registry. The recording – which makes it the Charge – will constitute notice to everyone that the Bank must give permission for you to sell, one, and two, even though your name is on the title deed and you own the property, since you owe the Bank, the money from the sale must satisfy your loan first before it goes anywhere else. If you are lucky, the sale pays off your debt and expenses and leaves a balance for you. If you are not lucky and it does not, you owe the balance of the loan and it will be placed in the hands of a debt collector. Make no mistake, the need for security is not a gamble for the Bank. It is a type of insurance so that the Bank can recoup most if not all of its money should you not pay.
This Charge also gives the Bank the right to sell the property in order to recoup its money, a right conferred on it by the Property Act, CAP 236 of the Laws of Barbados. In this case it will sell as Mortgagee (lender with security) and it does not need the permission or intervention of the Mortgagor (you). But usually this only happens if you are in default of your obligations. Usually.
“The Mortgagor promises to pay ‘on demand’”
This means what it says.
Your mortgage may or will contain other clauses which state that if you do not: pay the instalments on time each time, keep the premises insured, keep you insured, inform the Bank you are leasing the premises or making substantial changes to it, pay your other debts to the Bank or go bankrupt; then you are in default of the terms of the mortgage and the Bank has the right to give you notice to pay all sums due to it or it will sell your property to recoup the same. This list is not exhaustive. These are usually contained in a “term” mortgage i.e. you breach a term and you trigger a consequence like all the sums owed come due or some other action to your detriment. Of course, the Bank may have the discretion to let the default slide if you rectify it.
But, if the words “pay on demand” are in your mortgage, without “if you do such and such” type of language, and they usually are, it means you have a “demand” mortgage and the Bank can simply send you a demand without you having defaulted. Let me be clear; there does not have to be a default or a reason. All those other clauses may be in there to allow you to understand what is required or provide impetus, but it does not matter. Once it says “on demand” without more and you sign it, you are at the mercy of the Bank.
The good news is that the Bank is not remotely interested in voluntarily giving up the tidy bit of interest you’ll be paying to them in order to go into the real estate market. No thanks.
“…Together with interest to date of payment at such rates and upon such terms as may from time to time be agreed commission fees and other charges and all legal and other costs charges and expenses incurred by the Mortgagee in relation to the Mortgagors or the property hereby mortgaged on a full indemnity basis.”
The above, in various forms is usually in your mortgage. It means you pay whatever interest rate, if your mortgage has a variable rate that the Bank may set from time to time. It also means that the Bank is NOT to be out of pocket because of you (meaning of “full indemnity basis”). So you pay its legal fees as well as your own, any commission any agent may charge them as necessary, any charges or rates that come up because of the property like taxes or stamp duty, any expenses incurred because of you or your property. If you default and they have to pay a lawyer to get you to pay or to follow certain formalities in order to sell your property, you will have to pay for this. Granted, these charges in law must be “reasonable”. You should note, however, an attorney-at-law can agree remuneration at whatever rate with her client, as long as it is not below the minimum set by law. So watch out.
“The Mortgagors by way of security hereby irrevocably appoint the Mortgagee and the person deriving title under it and separately any receiver appointed hereunder severally to be their attorney”
A Power of Attorney is granted by you when you sign the mortgage to: the Bank, whomever the Bank assigns the mortgage to and, the receiver the Bank may appoint. This Power of Attorney cannot be revoked. Those of you who don’t watch soap operas should note that it means the Bank can act for you to do whatever is necessary to protect or realise its security. That same clause, further down, will usually say that it can ask you to sign whatever is necessary for this purpose. If you don’t sign, you are in breach of the mortgage contract.
“Any notice or demand for payment by the Mortgagee hereunder shall without prejudice to any other effective mode of making the same be deemed to have been properly served on the Mortgagors if served on the Mortgagors or their personal representatives personally or delivered or sent by registered letter post telex facsimile or cable to the Mortgagors or their personal representatives at their usual or last known place of abode or business.”
You may be tempted to say that you have not received whatever letter or notice and therefore you cannot be held responsible for the consequences. Don’t be silly. When you signed the Deed, you agreed that if it is sent to your address or last known address or to your representative, by any of the above means, you are served. Don’t change the rules of the game now you have your hands on the Bank’s money and it becomes inconvenient for you to repay it. What you should do is notify the Bank if you change address, get divorced, move to Miami, or have issues getting mail and provide a better address. I have seen people end up having to work and repay a balance owed, after the sale of the property, which is higher than the amount borrowed. Why? It could be many factors but too many times it’s because they avoided notifications, paying the debt or dealing with the inevitable sale of the property until the interest and charges were ridiculous. This is a heavy obligation you are undertaking. Act the part.
It’ll help you to appreciate those spectacular views and the walk-in closet.