# Commercial Prop Invest. Bank refuse to take off charge



## mercman (23 Oct 2013)

This is a smelly one. Purchased property in 2007; paid big money and inserted a decent amount of own money and balance offered and taken from a Bank. The tenants are blue chip, good leases and market rents. No payments ever missed, delayed or withheld. In 2008 Bank demanded more security which I obliged at serious legal costs. Everything was going fine until I decided it was time to request the other property back. That was five months ago and this week I requested again. Same story I was told NO. My own valuers suggest the value on the property on the mortgage is covered in excess of one million versus the lending. The Bank have never inspected the other property which they called upon as security and I now want my property back.

Seeking some decent suggestions please.


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## Brendan Burgess (23 Oct 2013)

Hi mercman

In 2008, you had a mortgage on a commercial property. 
The bank asked you to put up another property as further collateral.  Why did you do this?  Was it a condition of the original mortgage that you would do so if the LTV fell below a certain percentage? 

When you say "I want the other property back", what do you mean? What do you intend to do with it? 

Did you, by any chance, get a cheap tracker in 2008 in exchange for the additional security? 

I can see why the bank would want to keep the security. I can see why they would only give it up in exchange for something - for example, an increase in rate or a reduction in  the mortgage.


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## mercman (23 Oct 2013)

Brendan Burgess said:


> When you say "I want the other property back", what do you mean? What do you intend to do with it?



Nothing, apart from the real fact that their lending is completely covered. In 2008, the commercial property market went into free fall. The implication they gave me was this was only for a short term. 

They made the offer for the lending -- not me demanding the better rate. I could bring it to the Ombudsman's bureaux but this will take 10 months.

Any suggestions ??


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## Gerry Canning (24 Oct 2013)

Mercman; 

Banks were/are fond of implying things !
Upshot is they hold extra security.
Am I correct in this,
You are UNUSUAL in that payments on original mortgage have been made through the recession and you tell us Mr Bank is well secured on original mortgage without recourse to the extra security you give Mr Bank.
.................
If so , be very nice to Mr Bank and re-request the extra security back.Show them in writing your logic.
If they do not relent and YOUR figures add up, take your proposal to other Banks (they are starting to lend). You may be pleasantly surprised what other lenders will do.
Even if NEW lender wants all the security and it does not cost more , I suggest tell first lender you are moving. suddenly old lender may not wish to lose good account.
...............
Strongly advise do not waste time with Ombudsman, he only finds for consumers 12% of the time ,see comments by Brendan/myself  etc on eg ppi.


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## 44brendan (24 Oct 2013)

Previous post makes sense. Your commentary inplies that you received a better rate in return for supplying the additional security. Your only option now is to negotiate directly with the Bank or look at changing lender. However, change of lender is likley to result in additional costs and a likely increse in interest rate.


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## Brendan Burgess (24 Oct 2013)

mercman said:


> Nothing, ...
> 
> They made the offer for the lending -- not me demanding the better rate.



Hi Mercman 

I have a mortgage on my home.  I have some investments in shares. If AIB rings me today and asks me for the share certificates as additional security on the mortgage, I will just laugh at them. If they offer me to reduce my rate by 0.5% for extra security, I will certainly consider it. 

I don't understand what happened in 2008.

Was it 1) They asked you for extra security and you gave it to them although it was no benefit to you?

Or was it 2) They invited you to provide extra security in exchange for a reduced interest rate?


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## mercman (26 Oct 2013)

Brendan Burgess said:


> Was it 1) They asked you for extra security and you gave it to them although it was no benefit to you?



Exactly, they requested additional security as they predicted the Commercial Property market planking. This was supposed to be for a short term, but requestig the security to be released they told me a few months ago, that it would only be released when the loan is reduced by a large amount.


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## dub_nerd (26 Oct 2013)

I'm missing the same as everyone else. What was in it for you, to offer the extra security? Why didn't you just tell them to get lost?


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## mercman (27 Oct 2013)

dub_nerd said:


> I'm missing the same as everyone else. What was in it for you,



Absolutely nothing additional in it for me. However, it was made clear to me that if I didn't play ball, the Bank could exercise their right to dispose of the properties and any shortfall would be for my account. 

Bear in mind no payments, Capital & Interest were ever left short then and to this date (27/10/13).

I omitted to state that the same Bank at the time tried to force me fix the interest rate, but I refused. However when I did try and fix for 3 years, 2 years later, they refused to match the Interest Rate that was widely available in the market.


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## Brendan Burgess (27 Oct 2013)

mercman said:


> Absolutely nothing additional in it for me. However, it was made clear to me that if I didn't play ball, the Bank could exercise their right to dispose of the properties and any shortfall would be for my account.



Hi Mercman

That is very strange. Why did the bank have the right to dispose of the properties if you were not in arrears? 

It sounds to me as if you either had a short-term loan or a long-term loan with a "repayable on demand" clause.  

Brendan


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## mercman (27 Oct 2013)

Brendan Burgess said:


> It sounds to me as if you either had a short-term loan or a long-term loan with a "repayable on demand" clause.



At the time, the loans were for the duration of the leases. The 'repayable on demand' clause is common practice for all leases. Nothing different.


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## mercman (28 Oct 2013)

Well I do believe after a long weekend to think about this one, is that the best way forward, is to have my solicitor write the Bank in question a strong stiff letter, requesting release of the additional security. Otherwise we'll march to the courts and allow the judiciary decide.

I can't wait to send the case to the Ombudsman, as there is a waiting list which will take an eleven month wait.


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## dub_nerd (29 Oct 2013)

Be interested to know how you get on.


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## Brendan Burgess (29 Oct 2013)

mercman said:


> At the time, the loans were for the duration of the leases. The 'repayable on demand' clause is common practice for all leases.[do you mean "loans"?]  Nothing different.



Hi mercman

I had never heard of a loan for the duration of a lease. What was the length of the leases?  It seems an odd way of doing things. 

I can't see that you have any legal case here? 

1) The loans were repayable on demand
2) They said to you that they would demand repayment unless you provided extra security. 
3) You provided extra security. 
4) You want it back
5) They don't want their security reduced 

Why do you want the deeds back? Is it to sell the properties? If so, then why not reduce the loan?


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## mf1 (29 Oct 2013)

"Otherwise we'll march to the courts and allow the judiciary decide."

You can save yourself a great deal of money on legal fees by reading the posts above. 

You have a loan. They have security. Pay back all of the loan (borrowing from another lender if needs be) and they will release their security. They do not have to release their security until they are paid. 

I'm sure your solicitors will confirm this. They can write as many stiff letters as they like but they will not be serving you well if they allow you to march to the courts!

mf


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## mercman (29 Oct 2013)

INCORRECT.

The Bank have chosen to change the original terms of the loan without any prior consultation with the borrowers. The LTV issue has been addressed as the repayments coupled with the increase in the market prices deals with this issue. All the security requested at the time of loan commencement were adhered to. Furthermore, the loans are in personal names so in case of default the Bank will chase me personally.


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## 44brendan (29 Oct 2013)

Just to advise that the "repayable on demand" clause is a standard one in most loan agreements. However, from a Court perspective, this clause would not be sustainable where the lender called in a loan that was operating in line with the agreed original T&C's. However, the fact that mercman did provide additional security to the bank voluntarily does raise the issue of "contract". i.e. What benefit accrued to mercman in return for providing the additional security? I would have though that the solicitor would have a valid case here if the information provided is correct!


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## mf1 (29 Oct 2013)

"In 2008 Bank demanded more security which I obliged at serious legal costs."

They asked. He gave. If he had not given the security, they might have called in the loan. On the facts, a Court won't insist that the lender releases any additional security freely given. 

But there is a large element of going around in circles here. 

If OP wants his extra security back, he can ask for it ( already done) and, when they won't do it,  then go borrow the funds needed to redeem the entire loan, pay off the loan and transfer the original security to his new lender.  

We have a theory in our office that any client's problem usually has a range of solutions - which  very often do not include the preferred option that the client is putting forward and clients will fight to the death to secure their preferred option, even if it actually makes no sense. 

mf


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## mercman (29 Oct 2013)

mf1 said:


> If OP wants his extra security back, he can ask for it ( already done) and, when they won't do it,  then go borrow the funds needed to redeem the entire loan, pay off the loan and transfer the original security to his new lender.



In case you weren't aware of it, there is no fluid banking system operating in this country. Even if I could borrow the amount concerned, the rate would be so high compared to the existing, it would be a pointless exercise. 

Re the additional security, the Bank do not know where it is, what the condition of same is and they never inspected it, despite them requesting to do same, but they never showed up. It even can't be seen on Google Maps.

I always used to work on the principle that if the Bank shouted Jump, I'd say how high ? Times have changed and those days are gone. I, like many others have been blamed for their mistakes.


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## mercman (29 Oct 2013)

44brendan said:


> What benefit accrued to mercman in return for providing the additional security?



Absolutely no additional benefit was provided to me, other than knowing that I'd be able to keep my assets.


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## mf1 (29 Oct 2013)

"Even if I could borrow the amount concerned, the rate would be so high compared to the existing, it would be a pointless exercise. "

I believe you have your answer now. 

"Re the additional security, the Bank do not know where it is, what the condition of same is and they never inspected it, despite them requesting to do same, but they never showed up. It even can't be seen on Google Maps.

I always used to work on the principle that if the Bank shouted Jump, I'd say how high ? Times have changed and those days are gone. I, like many others have been blamed for their mistakes."


None of this is relevant. 

mf


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## mercman (29 Oct 2013)

It is relevant/ very relevant.

Otherwise why did the Bank insist of taking additional security when they had no clue of what or where it was. Called Bully Boy tactics from my view.


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## Brendan Burgess (29 Oct 2013)

mercman said:


> Absolutely no additional benefit was provided to me, other than knowing that I'd be able to keep my assets.



That sounds like a substantial benefit to me. 

Just be a bit careful that you don't run up a lot of legal fees letting off steam. It's ok to let off steam on askaboutmoney as it doesn't cost you anything.  

Did your "stiff letter" solicitor advise you to give the additional security to the bank back in 2008?   Or did he advise you not to give the additional security?


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## mercman (29 Oct 2013)

The Bank use the same firm of solicitors and therefore are unable to offer impartial advice. I use another firm as well, but as with all professionals, will undertake to do the work as long as they get paid for it.

I'm not letting off steam, but simply trying to invoke Eventual Tax Planning.

Brendan, I do not understand your comment where you state that keeping one's assets is a substantial benefit. Stupid me honoured their wishes without realising that the Bank's had broken their own rules.

We will see who will wear the eventual victory cap.


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## 44brendan (29 Oct 2013)

I disagree with BB in respect of the perception that "keeping the asset" is a benefit. In law it definitely is not so & having been on the opposite side of some cases where the Bank obtained security from clients over and above what was regarded as commercially acceptable I can confirm that this is not the "open & shut" case that some posters think it is. The fact that the Bank asked for additional security and the client supplied same without receiving any commercial benefit or independent legal advice is a significant issue and should definitely be progressed by you. I note that you have now taken legal advice on the matter and a good barrister should be in a better position than any of us to access the merits your case. While I don't subscribe to the general simplistic acceptance that "all clients are good" and "all banks are bad" I do see this case as being one where the Bank appears to have taken advantage of the clients co-operation (again assuming that all of the facts outlined in the posts are correct).


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## mercman (29 Oct 2013)

44brendan said:


> assuming that all of the facts outlined in the posts are correct).



Brendan, Thank you for your encouraging post. The facts as outlined are those as they occured. There are no skeletons hanging in the closet in this case or no 'forgot to mention' bitz.


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