The real cost of default
Posted: 9th December 2013
A mortgage defaulter who suffered the frustration of seeing his repossessed home sold to a property developer, who turned a substantial profit, has failed to convince the Court of Appeal that he is entitled to legal redress.
Following foreclosure by the mortgage lender, the property was sold to a developer who did well by converting it from a single dwelling house into flats and offices. The sale price achieved by the lender was £221,500, but the aggrieved original owner argued that the valuation adopted had ignored the property’s ‘obvious development potential’ and that it had been worth at least £325,000.
The original owner’s claim against the lender was dismissed at the county court and, in rejecting his challenge to that decision, the Court of Appeal emphasised that the lender had not been obliged to wait for the market to improve, or to embark on an extended marketing campaign, before selling the property. All that was required of the lender was to obtain the market value of the property when it chose to sell it.
No other potential purchaser had at the time emerged who was willing to pay more than £221,500 for the property and that fact could not be attributed to any failure on the lender’s part to adequately market it. In the circumstances, there was no realistic prospect of the original owner persuading the Court that the lender had been negligent in undervaluing the property and selling it too cheaply.