Be careful to read the fine print before signing away your furniture for a loan
Dear Claudienne - I am an insurance agent and I have been borrowing money from OBF (New Era Finance Limited) since 2004. On December 13, 2013, I borrowed $47,000 and it was agreed that the sum, with interest added, was to be paid off by May 13, 2014. I was to make monthly payments beginning December 27. However, I told the loans officer that I could not make the first payment by that date. She insisted that I would have to meet that deadline and I eventually agreed because I urgently needed the money to pay my rent and had no choice.
Up until today, March 26, I have not paid any money at all on the loan. On Thursday, March 20, the finance company's bailiff came to my house when I was not there. A locksmith accompanying the bailiff opened the locks on the grille and my living room door and entered my flat.
The bailiff seized two dressers, a five-burner stove, a washing machine, my two-year-old two-door self-defrosting refrigerator, two pieces of a sectional living room settee and a 19-inch television that I had used to secure the loan.
A neighbour phoned and notified me that someone was entering my house and I called 119, but by the time the police got to the house the items were already loaded onto the truck. When I went to the police station they told me that it was not a police matter and that I needed a lawyer.
The only items left in my house were two beds, two fans, two night tables and a TV stand.
I was told that in order to retrieve the items I must pay the $120,629.74 outstanding as at March 28, 2014. After March 28, the balance would attract a charge of $575.99 per day. On paying this money the company would require 24 hours' notice to return the items to me.
Please let me know if it was legal for the finance company to enter my house while I was not there. Can I sue the company?
A New Era Finance executive told Tell Claudienne that a Bill of Sale agreement you signed gave the bailiff the authority to enter your flat in your absence. The Bill of Sale was a legal document that you signed in 2009 when you borrowed money from the finance company. At that time you had also used your 1997 Nissan Pulsar motor car, in addition to the items that were seized on March 20, as security for that loan. The Bill of Sale Agreement signed by you was duly registered by New Era at the Registrar General's Department.
You said that you did not have a copy of the Bill of Sale agreement so we advised you to pay New Era a fee and get a copy. We note that you got a copy of the agreement and sent us a facsimile.
From our reading of the document, it appears that the Bill of Sale agreement that you signed empowered New Era to enter your house in your absence.
The relevant portion of Section C of the Bill of Sale agreement that you signed in 2009 stated the following:
"If at anytime during the continuance of this security the Borrower shall be in breach of any of his obligations contained herein then without any further consent on the part of the Borrower (and whether the money hereby secured shall not be actually due and payable) the Lender or its representative or agent may enter and remain upon any premises where the assigned goods or any of them and all additions or substitutions for and replacements in lieu of same may be or believed to be and if necessary may break open doors and windows gates and fences in order to obtain possession thereof and to seize and take away the same and may also at any time after the date of the seizure sell the assigned goods or any part thereof either by public auction or private contract etc ........ "
You argued that Section C of the Bill of Sale agreement was only applicable to your 2009 New Era Finance loan as you did not sign a Bill of Sale agreement when you applied for the loan in December 2013.
However, New Era said that the terms of the Bill of Sale Agreement that you signed in 2009 were applicable to every loan made to you by the company thereafter. The spokesman referred us to section H of the Bill of Sale Agreement that you signed in 2009.
Section H of the agreement stated the following:
"This indenture shall be impressed in the first instance with stamp duty covering an aggregate indebtedness in the amount of $50,000... but the Lender shall be and is hereby empowered at any time or times hereafter to impress additional stamp duty hereon covering any sum or sums by which the indebtedness hereby secured may exceed the amount of $50,000, it being the intent of these present that until its discharge the Bill of Sale be a continuing security covering indebtedness from the Borrower from time to time."
The Ministry of Finance said that the loan finance companies are currently not regulated, and where there are breaches under the Money Lending Act the minister has no powers to remedy them. The Financial Regulation Division of the finance ministry said that a law is now being drafted to regulate the finance companies, but when the regulations will come into effect is uncertain.
Nonetheless, a legal opinion suggests that you could possibly seek redress through the courts under Contract Law. The lawyer said that under contract law there is the possibility that past considerations would not be legal as continuation for a contract in the future.
We hope that in the future you will carefully read the fine print before you sign any document.
Have a problem with a store, utility, a company: telephone 936-9436 or write to: Tell Claudienne c/o Sunday Finance, Jamaica Observer, 40-42 1/2 Beechwood Avenue, Kingston 5; or e-mail: firstname.lastname@example.org. Please include a contact phone number.