CAS COOVADIA: Here’s what’s at stake if land grabs are sanctioned
Borrowers would still be liable for the full debt on an expropriated property, according to initial legal opinion
The property market and economic growth generally will be severely affected by the expropriation of land, whether without compensation, below market value, or outside the law, the constitution and the courts.
Property owners with mortgages and other bonds on property that may be expropriated without compensation face especially severe liabilities. Initial legal opinion indicates that borrowers would still be liable for the full debt on a property, even if the underlying asset has been expropriated without compensation. This is because clients enter into loan agreements with banks that are secured by mortgages over the property. These loan agreements remain valid and binding, irrespective of the value realised for the property used as security...
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