Curb unscrupulous auctions
AN unfair and unjust auction over the past weekend in which the Development Bank of Namibia (DBN) attempted to sell off the properties of Ochsenwagen Hotel in Rehoboth gives clear testimony to how unregulated and scrupulous auctions have continued to bring agony to many Namibians and widen the scope of debt among citizens.
In this particular auction, the auctioneer asked buyers how much they wanted to pay for furniture, setting off at a very low price, far below the market value of most goods. This in essence meant that if the auction which was blocked by the Black Business Leadership Network of Namibia (BBLNN) had gone ahead, 62-year-old Anthony Mouton who owns the property would have lost everything but still remained with a huge debt to pay.
We are worried that if there is no regulation to these auctions, they will become platforms for enriching friends and families with auctioneers selling off goods to target recipients for almost close to nothing at the expense of the debtor who will carry the shortfall alone.
Over the past few years, we are aware of allegations on how lawyers, messengers of court and bank officials connive to sell off properties at unreasonably low prices to their cronies without the will to ensure that the debtor pays off their debt in the auction.
In this regard, it is critical that a new law to enable courts to set a ‘reserve price’ (minimum price) at which property of a defaulting owner should be auctioned off is long overdue and should be considered as soon as possible.
Until now many Namibians have lost their properties to speculators who snap them up at prices that are far below market value. But to sell someone’s home for an unreasonably low price is a violation of their constitutional housing and property rights – not to mention the negative impact on their dignity and social wellbeing.
These loopholes need to be shut and Namibia’s conduct in this regard must be aligned with international best practice. For example, German law already prescribes certain set minimums at which the property must be auctioned.
Introducing similar rules in Namibia means that the country’s home owners and in particular small business owners will be better protected when faced with financial difficulties.
We cannot continue to allow speculators to snatch up properties for ridiculously low amounts at poorly attended auctions and then sell them on the private market for huge profits. The owner then suffers a massive loss because he or she must still pay the remaining debt, while someone else profits from the true value of the property.
Apart from this there surely would be a need for complementary action to make these new rules even more efficient. The system should for example ensure that auctions are better advertised and better attended.
Without these reforms, exploitation will continue unabated and more businesses and individuals will continue to suffer at the hands of individuals who have seen loopholes to exploit for their own benefit.