Leases not security for banks

Leases will not stand security for bank loans

Facebook by Advocate Fadzayi Mahere

 

1 February 2018

According to today's Herald, the Government has directed that all remaining white commercial farmers be issued with 99-year leases. http://www.herald.co.zw/99-year-leases-for-white-farmers/

With respect, the move is cosmetic in nature as the said leases are not going to improve in any way the legal position of the farmers who mistakenly think they now have some sort of cognizable land tenure. The legal reality is that they do not.

1. The Constitution still overrides the terms of any lease agreement entered into by the government with farmers. Section 72(2) is still in force and gives the government the power to acquire any land for a public purpose. This the government can do with the mere stroke of a pen. This section would have to be repealed before the farmers can celebrate what they mistakenly believe to be stronger tenure to the land. Mind you, the jurisprudence of the Supreme and Constitutional Courts to the effect that the Minister of Lands has wide powers to distribute and re-allocate land is still firmly in place. Those judgments empower the Minister to even ignore extant bilateral protection agreements entered into with foreign governments for the benefit of international investors. One has to do a lot more than scream "new dispensation!" in order to change the applicable law.

2. From a purely property law perspective, a lease does not confer a real right, enforceable against the whole world in the way that title deeds do. A lease is a mere contract affording only personal rights. A lease does not confer ownership and is a legal relationship that is capable of being terminated on good cause shown under law. Under the Gazetted Lands (Consequential Provisions) Act, a lease is on a similar footing to an offer letter and a permit. It gives one the right only to possess the land. One cannot sell or encumber the property as one would if they were an owner. 

3. The decision only to protect current possessors of agricultural land is arbitrary and a possible violation of section 68 of the Constitution which guarantees inter alia the right to substantive fairness when it comes to government conduct. There is no legal reason why a farmer who was dispossessed two years ago should not be afforded the same administrative treatment as a farmer who remains on the land today. To do so, is to violate the right to equal protection of the law enshrined under section 56(1) of the Constitution.

4. There is a misconception that these leases will be able to stand as real security for bank loans and other mortgages. The unfortunate reality is that long leases won't improve a lessee's ability to borrow money from a bank. Land leases of the nature contemplated do not carry the same strength as title deeds to urban land, registered in the deeds office in the eyes of a financial institution. The principles that govern real security are such that the lender should be able to register their mortgage over the property with a view to selling the same should the debtor default. Section 72 of the Constitution vests all agricultural land in the State and the bank would be powerless to sell the land in the event of a default. What right-thinking bank would lend under those terms?

5. The rule of law means that policy statements made in newspapers do not confer rights. The Constitution and enactments lawfully passed do. Citizens must only celebrate these policies once they have the force of law. Unless they do, these proposals are only hot air designed to create a false impression of change. Amending the law is the true test. I challenge the government to change the relevant laws to show that it is indeed genuine about fortifying the right to property in Zimbabwe. Mind you, despite all sorts of niceties being bandied about, the Indigenization Act is also still firmly in place. If the government no longer intends to apply it as promised, the said law must be repealed.

There, I said it.

About Fadzayi Mahere

Fadzayi grew up in Mount Pleasant, completing her primary, secondary and tertiary education in the Mt. Pleasant constituency. She is still a resident and part of the MP community.

Fadzayi Mahere practices as an advocate/barrister at the Harare Bar. Her main fields of practice include constitutional law, human rights law and administrative law. She also takes on appellate criminal work and specialised crime.

She holds a Masters in International Law from the University of Cambridge and a Bachelor of Laws from the University of Zimbabwe.

Prior to reading law at Cambridge, Fadzayi worked in the Office of the Prosecutor at the International Criminal Court in the Hague and for the United Nations International Criminal Tribunal for Rwanda.

She was also awarded a Pegasus Fellowship from the Honourable Society of the Inner Temple in London, which enabled her to work in various Chambers in London, including Essex Court Chambers and Doughty Street Chambers. She has marshalled with Judge Paget QC at the Old Bailey, London’s Oldest Criminal Court in 2010.

In addition to her practise as an advocate, Fadzayi lectures Administrative Law and Property Law at the University of Zimbabwe.

https://www.fadzayi4mp.com/biography/

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