Thanksgreenspun.com : LUSENET : Repossession : One Thread
I just wanted to say a big thank you to Neil and Mark for thus far helping me through this minefield in the area of shortfall and the like. It's really helping me through the process of Eversheds termination to get money off me and Nationwides obvious lack of understanding. "Opportunites are never missed, they are just taken by greedy lenders !" I will let you know of outcome on this site.
-- Terry (email@example.com), May 15, 2003
Hi Terry glad to be of help, little bit of caselaw regarding underselling you may also be interest in:
Skipton Building Society v. Bratley and Stott CA 10 Dec 99:-
BS loaned to a company, secured by mortgage. B and S guaranteed company’s obligations to BS. Administrative Receivers appointed over company. Owner of adjacent property offered £122,500 for the mortgaged property. Completion delayed for few months.
By time sale completed, shortfall, which BS sought to recover from guarantors.
S argued that best price not obtained as property not advertised and price did not reflect special purchaser, so released from liability. Judge found breach of duty, but reduced BS claim by only £25,000 representing loss of chance of obtaining higher price. S appealed.
CA allowed the appeal.
Judge was correct that breach of duty did not absolve guarantor from liability, merely reducing guarantor’s liability pro tanto. But loss of a chance was not correct basis of quantification. Damages should be calculated on difference between what could have been reasonably obtained and what was actually obtained. In this case, that difference was more than the shortfall, so BS should recover nothing.
-- Neil (Neilaw_uk@yahoo.co.uk), May 15, 2003.
PS- if you want to take a look at what the price at time of repossession was, go to Nationwides own website and look up their price index calculator. You can load in the cost at purchase and the date of repossession to give you a figure at which it should have been approx. sold. If its substantially different...then bingo, throw that caselaw at em and hold on tight!!!!
-- Neil (Neilaw_uk@yahoo.co.uk), May 15, 2003.
I've got a bit more on the Skipton case from a solicitor, don't forget though us poor borrowers have only got 6 years to counterclaim, subject to a possible exception which I posted up the other day. Info follows:
I have found the case I referred to yesterday
It is Skipton BS v Stott (CA 10.12.1999) - I don't have a proper law report reference at the moment.
The involved the sale of property by an insolvent company's receiver.
An offer of £122,00 was made to buy the co's premises by the owners of an adjacent property, later increased to £122,500.
An independent valuation was obtained and the offer was accepted. By the time that the sale was completed the debt had risen to £135,430 and the net proceeds of the sale amounted £118,000, leaving a shortfall of £17,430. The secured lender then sued for this shortfall.
The claim was defended on the basis that as the property was not placed on the open market, the receivers had not taken reasonable care to ensure that the p'pty was sold for was the best price that could reasonably be obtained.
It was held on appeal that without exposure to the open market, the value of the p'pty had to be decided on the basis of expert evidence. This evidence valued the p'pty at between £142,000 and £168,000.
It was also held that for the claim to fail it was only necessary to show that the market value was greater than £135,430, the amount of the outstanding debt. As the evidence showed that that the current market value was significantly higher that that, the whole claim failed.
I think that this could possibly be extended to situations where there was insufficient exposure to the market. In one case I know of, a repo'd p'pty was not properly marketed. No sale board was put up outside the house, there were no advertisements in local papers and no details of the property were placed in the estate agents window. (It actually appeared that the estate agents were trying to sell the house on the cheap to a relation of a staff member, although this was never argued).
In spite of the inadequate marketing, a number of people made offers for the house, and rather than allow these potential vendors to bid each other up to the highest price, the estate agent asked for sealed bids. One potential vendor was unsuccessful but then insisted that he wanted to make a higher offer, and after much hassle, the estate agents set a slightly higher price and sold the house to the first person who signed a contract at that price.
It was clear that a higher price could have been obtained.
For various reasons, the matter never got to court, but all the above issues led to a very advantageous settlement.
Here is some more interesting info from the same solicitor:
I think that there have not been many cases of successful underselling claims because while lenders have a responsibility to act reasonably, it is not very difficult for them to meet this responsibility and, in general, because lenders have very wide discretion as to how and when they sell a property. There is also the obvious problem of getting evidence relating to a sale that may have happened a number of years ago.
I have heard of a case that was adjourned pending the response to a SARN but can't remember the details. As the overrriding objective relates to dealing with cases justly, I would have thought that an adjournment could be justified on this basis. Perhaps a disclosure order could be requested covering all documents covered by the SARN, although disclosure usually relates to specified documents.
-- M Amos (firstname.lastname@example.org), May 15, 2003.