# In what circumstances does the lender have the right to charge legal costs?



## Marellie99 (16 Jun 2016)

Can anyone tell me if it is legal for the banks to add on legal fees associated with restructuring on to a mortgage. I was in arrears, the bank started legal action for court despite my efforts to come to an agreement, eventually they put together a repayment plan that suited me but now I find that they have added on legal fees. Is this legal


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## Brendan Burgess (16 Jun 2016)

Hi Marellie

I was about to start a thread on this. A friend of mine has been charged €1,500 in legal fees.   He doesn't know what the court order was, but from my experience in the Dublin Circuit Court, the Registrar rarely grants orders for fees. 

I understand that the mortgage contract allows the lenders to charge fees. But if so, then I don't know why the lenders apply for their costs? 

In one case recently, the Registrar made it clear that she did not want to hear that costs were charged. 

Brendan


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## cremeegg (16 Jun 2016)

Would it be true to say that the OP does not have to pay these charges unless the bank get a court order.


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## Marellie99 (16 Jun 2016)

Sorry for the poor explaination but these fees were added on even though it did not reach court or anywhere near it. €1500 charge to send me out a document telling me that they intend to proceed to court. I have since come to an arrangement with them but I only recently discovered that they added this sum to my mortgage balance without telling me and they are charging me for house insurance even though I have the house insured with a different company and have sent off the indemnity letter.


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## Gordon Gekko (7 Jul 2016)

I recently attended a Circuit Court hearing in front of the Dublin Registrar as moral support for a family friend. I will write about my wider observations, but with regard to costs, the Registrar was quite pointed. She does not want banks adding costs without her having opined on those costs. She repeated this point for the benefit of anyone not listening. 

For someone who has appeared three times, the costs were €3k just to give some context.


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## Brendan Burgess (7 Jul 2016)

Thanks Gordon

Did she award costs of €3k against someone? 

I have been in the court on many occasions, and have never seen a figure that high. She has granted costs when the borrower doesn't show up but they were not specified.

Brendan


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## Branz (8 Jul 2016)

Marellie99 said:


> Can anyone tell me if it is legal for the banks to add on legal fees associated with restructuring on to a mortgage. I was in arrears, the bank started legal action for court despite my efforts to come to an agreement, eventually they put together a repayment plan that suited me but now I find that they have added on legal fees. Is this legal



Notwithstanding what the others have written, you will find that the loan agreement will have a clause covering this point, which gives rise to the charges being raised and the legal basis therefor from the bank's perspective.


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## Brendan Burgess (8 Jul 2016)

Hi Branz

That is what I assumed. But why do they seek an order for their costs then?  

If I were the lender, I would not seek an order, I would just add the costs to the mortgage. 
If I seek an order and am refused, then I would be contravening a court order by adding costs. 

In one court, Donegal, I think, she granted €300 costs in any case where the borrower didn't show up.  In other courts, where the Registrar grants costs, they are " to be taxed in default of agreement."

Brendan


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## 44brendan (8 Jul 2016)

I would be reasonable sure that the bank in question are chancing their arm here!! I am very familiar with the mortgage agreements of my bank (which tend to be broadly similar across the sector) and there are no clauses that would allow us to apply any recovery costs directly to the clients account. As per previous postings when legal action for recovery becomes necessary we would need to apply for costs as part of that process and have no authority to take any costs directly from the loan account.
You need to write to your bank asking for the authority to apply this charge to your account as in my view it appears somewhat dodgy!!


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## Brendan Burgess (8 Jul 2016)

44brendan said:


> I am very familiar with the mortgage agreements of my bank (which tend to be broadly similar across the sector) and there are no clauses that would allow us to apply any recovery costs directly to the clients account.



That astonishes me. I had assumed it was in all mortgage contracts. 

Brendan


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## Gordon Gekko (8 Jul 2016)

Brendan Burgess said:


> That astonishes me. I had assumed it was in all mortgage contracts.
> 
> Brendan



So did I, but the Registrar very pointedly said "do not levy costs without me having opined on it" which is consistent with the above.


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## 44brendan (8 Jul 2016)

Just checked one again to make sure. Definitely no clause to apply any charge to the clients loan account (legal or other). falls in line with our standard policy to ensure that any debit other than interest applied to a client loan account is fully authorized by the client.


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## itsallwrong (2 Feb 2017)

Yep.
My crew added charges to my account before the court date and added more after the court.
I have applied for a copy of the court verdict to go and attack them with.
I also did not get any confirmation or communication that I was being charged the fees.
The fairies just put a combined debit of 1402 euro, which is on the capital and accruing interest !

*So the attack plan is:*
Copy of court verdict (15 quid)
Write to the lender  with a copy of the court ruling.
Request a copy of the letter informing me I am being charged legal fees.
Draft a complaint letter to Central Bank and Ombudsman.
Notify the court if the bank refuses to refund the fees.
If no joy - apply to have the case heard again by the Registrar by writing to them,
pointing out what has taken place.
Brush my hair and ring my buddies in the media and ask to they want to rip into the bank (again)

Catchy signature phrase:
Those who stay lying down will always get walked on

To battle..


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## Brendan Burgess (3 Feb 2017)

OK, I have clarified this a bit further and I believe this to be the position. 

Where the mortgage contract allows the lender to charge legal costs for chasing arrears, they can charge them, up to the period just before issuing court proceedings. 

However, the costs of court proceedings are a matter for the court alone.  They cannot charge you for issuing court proceedings if the Registrar or Judge has told them not to. 

I understand that if the Registrar makes no comment on costs, but just strikes out the proceedings, then they can charge costs. 

So, if you reach an agreement with your lender after proceedings have been reached and they tell you that they are going to apply for an order to strike out the proceedings, then you should go to court.  Stand up when the case is called and ask the Registrar for an order that no costs are to be awarded. The practice in Dublin is to allow no costs, where no formal order is made. 

If your lender has added costs to your mortgage without a court order, then you should challenge it. 
As itsallwrong says, go to the Circuit Court Office and ask them do "draw" the court order in your case.  The Registrar actually makes an order to strike the case out. 
Send this to your lender and ask for a refund. 

Brendan


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## demoivre (3 Feb 2017)

Brendan Burgess said:


> If your lender has added costs to your mortgage without a court order, then you should challenge it.
> As itsallwrong says, go to the Circuit Court Office and ask them do "draw" the court order in your case. *The Registrar actually makes an order to strike the case out. *
> Send this to your lender and ask for a refund.



Are you saying that the adding of costs by a bank to a mortgage account, during an active repossession case before the courts and where a judge has made no order, would be grounds for asking the judge to strike the case out at the next sitting?


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## Brendan Burgess (3 Feb 2017)

No, I am not saying that at all. 

If the bank decides not to proceed with a case, they ask the Registrar/Judge to strike out the case. But the Registrar actually makes an order to strike out the case.  So it is an official court order.  

If the bank has already charged you, you should tell the Registrar who will probably order the bank to refund the costs. 

Brendan


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## itsallwrong (4 Feb 2017)

Should you write to the Registrar outlining your case ?


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## Brendan Burgess (5 Feb 2017)

itsallwrong said:


> Should you write to the Registrar outlining your case ?



I don't know that there is much point to this. 

The Registrar makes an order, but there is no facility for her to follow up on it. 

If you write to your lender with a copy of the order, they should refund the costs. If they don't, you would have to go to the Circuit Court office and find out if you can bring the case to the court again. 

Of course, you should also refer it to the Central Bank, as I believe that it's an example  of what is probably systemic mis-charging by the banks.

Brendan


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## itsallwrong (5 Feb 2017)

If you get no result from the bank, and as nobody else appears to have the power to make them - except a court,
You are potentially putting the bank on trial for taking wrongful charges when instructed otherwise.
You would not be appealing the decision of the court, which was in your favor.
Is it a simple enough procedure ?
Does it cost much?


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## demoivre (7 Feb 2017)

Even if the bank does refund legal fees what's to stop them adding 25bp to a variable rate mortgage to get the money back, and of course to put manners on the borrower for having the audacity to challenge them ?


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## Brendan Burgess (7 Feb 2017)

None of the Irish banks charge personalised mortgage rates on family homes, as far as I am aware. 

Brendan


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## itsallwrong (7 Feb 2017)

Quite a lot !
I have done more than challenge my bank in the last few years.
No retaliation yet


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