Mortgage shortfalls and the Appeal Court

I am looking at a copy of the Guardian 'Money' section June 24th 2000. Barrister Richard Colbey reports on a case which the Skipton building society *lost* at the Court of Appeal over an instance where they had sold a property at undevalue. It was a business premises, but apparently the same principles will apply to all repossessed borrowers. The Court of Appeal took the view that "Once there is evidence that a property had been sold at undervalue, the courts should no longer assume that the fact of the forced sale reduced the price. The lender would still have to have taken reasonable steps to secure that value. Anyone being chased by a lender for arrears [here meaning mortgage shortfall] that existed after their home was repossessed should rely on this case if they are not satisfied. It may be that lenders will have to adjust their arrears figures in cases where the price was suspiciously low.' [This is especially the case in instances where the purchaser could be said to have some benefit - e.g. the leaseholder, a neighbour wishing to join two properties together, the estate agent, etc.] Further, 'The fact of the forced sale itself often won't affect the value at all. Indeed, the fact that there is no owner-occupier means that there is no chain and that the seller can be flexible about completion dates. This, in turn, might actually increase the price that should be obtained.' Well, so says the Guardian's resident barrister-who-explains-things, Richard Colbey. Perhaps we ought to thank John Stott who took on the Skipton. I hope this might be of use to someone out there. all best Eleanor

[ Previous | Next ]