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cityguru
cityguru, Solicitor
Category: Property Law
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Experience:  solicitor
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we have a buy to let mortgage with TMB part of lloyds now. we

Customer Question

we have a buy to let mortgage with TMB part of lloyds now.
we have always had arrears on it due to problems renting it out after building 4 properties.
the arrears built up but we kept making arrangements etc. on an identical property we had the same situation and we made 6 months payments and they consolidated the arrears.
on the property we have a problem with we only paid 5 in a row so the arrears were still on teh account.
then in march 2013 a letter was sent with all our TMB mortgages saying that this was our new monthly payment. the new payment included the origianl loan on interest only and all of the arrears on repayment basis over the remaining term of the loan. we subsequently have paid the higher payment several times although again last year we had problems with depression and things were very bad financially.
in October TMB appointed a receiver and the representative of these frightened the tennat away and he gave them the keys. they boarded up the property without telling us.

our question is they are saying to regain control we must repay all the arrears which they say are £15000! however our question is by accepting our payments of £671 several times after the letter of march 2013 have they effectively consolidated the arrears by tacit agreement. we have asked them several times and they deny this and still havent referred it to their legal department as we have asked them several times.
we are going to take it to the ombudsman but they do not address legal issues only the poor treatment that we have received.

all our other loans with them have performing arrangements on them.

we would be very grateful for any help as they are threatening to sell the property for a pittance and this could threaten our whole livelihood and business.
thanks
chris
Submitted: 2 years ago.
Category: Property Law
Expert:  cityguru replied 2 years ago.
Hi Thanks for your question. Can you clarify please after they consolidated the loan in March 2013 did you make all of the scheduled payments at the new rate until they appointed a receiver?

Your question seems to imply that you may have more than one mortgage? Is there only the one with Lloyd's. If there is more than one are you in default on the others?
Customer: replied 2 years ago.

unfortunately no we missed a few payments following the new payment in march. but overall no more than four payments. we had a problem with an adjacent property(not ours) that was basically a drug den and we lost alot of tenants hence the cash flow problems last year. but we have since filled all vacancies and have the money to service all the loans including this one.


 


yes we have a total of three tmb mortgages and one halifax one.


there have been problems on these but they are all currently being serviced and we have proper agreed arrangements in place.

Expert:  cityguru replied 2 years ago.
Thanks for the additional information. I am sorry to say that you really do not have any grounds to dispute their action. It is unlikely that by consolidating the arrears, TMB waived your previous defaults but the problem with a loan of this type is that any non or late payment is a default and if you defaulted again on the rescheduled payments they are quite entitled to put a receiver in. To make matters worse, there is likely to be what is know as a cross default clause in all your loans ( as thee are commercial not domestic loans) and they could call all three because of a default in any one. So if they have only appointed a receiver to one property you are probably quite lucky. You have also almost certainly acted improperly by going back into possession after they appointed a receiver . Do they know about this?

I am of course sorry to hear about the press this is putting you under and if this was a domestic mortgage then you would no doubt be reasonably entitled to ask the bank to take your circumstances into account. AS these ate business loans then to be honest they can pretty much act as they please.

So if you cannot clear the arrears they can proceed with a forced sale and there is nothing really you can do about it. I have to say that it is not unusual for a bank to foreclose on all their loans at once so the fact they have allowed you to carry on with the others is better treatment than some banks permit.

Is there no way you can agree a sale of one property to reduce the overall borrowing and clear the arrears?
Customer: replied 2 years ago.


i appreciate what you are saying but if they effectively created a tacit agreement by giving us new repayment figures in march and we paid the new amount then have they created a tacit agreement.


if it was deemed we only had three or four months arrears then they probably wouldnt have appointed receivers as they havent on the next door property? it is crucial to our argument.


 


we also have another property with £9000 arrears with them and they havent appointed receivers on that!


 


we just need to know if legally is it correct that if we perform on the new figures have we created a contract because we have effectively been paying some of the arrears off?


 


we took the actions to put tenant back in because all of our properties are on the same street and it looked really bad boarded up and we have passed on the rent to them as well and made mortgage payment in jan.


 


they left the boiler and property exposed to damp and frost by taking out the glass!!


we do intend selling the properties anyway when we could but they have neg equity. if they sell this one then we are worried about the rest as you say. and we have 6 other properties which would put them all at risk. it is our only income as well.

Expert:  cityguru replied 2 years ago.
What the legal position is precisely will depend upon whether they said that by rescheduling they were waiving prior breaches but it really jokes no difference if you then defaulted in the rescheduled payments because that entitles them to put in a receiver anyway.

Your argument has no legal basis at all. You cannot say just because they might not have put in a receiver with only 3 months arrears that they are not entitled to.

I understand your motivation in going back into the property but it is simply a further breach of the loan. I suggest you need to try and agree an orderly run off of the portfolio. IF you are significantly in arrears on others then you simply risk having them foreclose on those swell.

Customer: replied 2 years ago.


i think you are missing the point. they are saying they will return the property to us but onkly if we repay the arrears in full. its obviously fundamental to us if those arrears are deemed to be £3000 or £15000!


 


i have had receivers appointed 3 times on properties and have never co-operated with them and every time the properties have been returned to my control.


 


its irrelevant if we defaulted on the new scheduled payments. if they effectively created a new agreement by stating that the new payments included arrears prior to that date then surely if we made only one payment then we have performed on that new agreement and it is binding upon them?


 


they told us their legal person was going to call us but he never did surprisingly they have just kept denying everything which they obviously will.


its effectively repossession through the back door and is entirely immoral. if they got a court order then i could stomach that but they dont need to. we sure arnt going to lie down and take it.


the receivers are taking liberties too. they have added £2500 of costs on to the loan for bogus bills they have invented. just had a breakdown and its laughable. no wonder they said the letting is unviable

Expert:  cityguru replied 2 years ago.
Thanks no I am not missing the point. Unless they expressly agreed to capitalise the arrears and waive the breach they are entitled to ask for whatever they want . They are not obliged to give you the property back at all. They can dictate whatever terms they wish . They could even ask for part of the principal to be repaid in theory.

Legally it is not irrelevant that you defaulted. whatever the practice you have experienced in the past, legally they can take possession if you default.

At the end of the day it is a question of what deal you agree that will satisfy the bank but I am afraid regardless of your view of your treatment - which you rightly say can be the subject of a complaint to the ombudsman - if the possession clause in the loan has been triggered then under current law you have no way of preventing the selling if at is what they choose to do. Your only recourse is to sue if they completely fail to handle the sale properly.
Customer: replied 2 years ago.

what i am trying to say is that if legally they have given me a new payment amount which includes an element of repayment on the arrears then they have effectively put those arrears on the mortgage.


for example if you had a loan and you missed three payments and then the loan company said your new payment is x and this included interest and capital on those three payments you/they have effectively made an arrangement to repay the arrears? which is what they did.


 


my point being that because they are saying the arrears are the higher figure and not just the payments missed since march the LPA department are taking the view that it is all of the money needed not just the £3000 since march.


 


by changing the monthly payment figure have they not created a new contract and by making payments have i not performed on this therefore making it binding on us both? eg i couldnt turn round and say no i'm not paying the higher figure because i have effectively agreed to it by paying it!


as you say this is in its simplest form a commercial loan so surely standard contract law applies.


i think a court may well give me the benefit of the doubt in this instance.


Expert:  cityguru replied 2 years ago.
Thanks. I think you are missing the point. When you default under a loan then the whole loan become repayable. So it make no difference legally whether they have capitalised the arrears or not. Even if they have you have defaulted under the revised arrangement. That means that if they wish they can ask for anything they want as a condition of not foreclosing. The fact that they are only asking for the old arrears and presumably the new ones at least gives you the opportunity to get the property out of receivership.

Even if the new payment figure is binding as you have defaulted on it, the whole loan is due. I doubt if the new payment figure is binding anyway , you have not given any consideration for it and it is just a concession on their part.

I wish you luck in trying to advance you argument about the arrears - it is of course worth trying but I do not think it has any legal basis.

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