Unsecured,Unregulated bridging Contract. is it fair?

[cul8rm8e]

I am hoping that a legal expert can give a general opinion on fairness the contract, which is in full below. Can anyone also comment on the fact that the solicitor took about 2-3 minutes to go over it and simply said. "everything looks fine" There was nothing within this contract that he felt had to be highlighted or brought to attention of the person signing it who had never dealt with such a contract before.

The loan was a bridging loan to build residential property which went belly up due to the lender pulling the plug for reasons that i cant mention on here. I would also like to add that where it says "the lender" this was the name of a partnership company NOT Limited and the action being taken by the lender to recover the part of the loan they did provide (about a third) is being taken by a Limited company he also owns.

Why would a limited company take the action when it was the partnership that loaned the money? the limited company had NO Consumer license to lend money as they were a mortgage broker. The Partnership did have a Consumer license to lend money!!

Can a Partnership Company, which i understand is a legal entity on its own, be a trading name of a Limited company?

The think is, the whole issue stinks. A counter claim will be made against the lender and looks like it will be more beneficial to pass it off under the Limited company as it doesnt hold a great deal of funds.

Just thought i would also mention that the lender on the cntract (Partnership) has been running for 10 years and the Limited company taking action was only setup 18 month ago. This clearly shows it was a separate entity and has been for years. Anyway, contact below with everything relating to the names of the Partnership and Limited company removed.

THE LOAN WAS PROVIDED TO AN INDIVIDUAL- NOT A COMPANY

I would like advise everyone who reads or participates in providing any opinions on this post that I am asking these questions simply out of curiosity and without the knowledge or prior consent of the person/s involved in this matter.

Contract:


THE LENDER


FACILITY LETTER



Date: …. December 2012, ….
To : Borrower

Dear Borrower

Re : Secured Property Address

Having considered your application for a loan, we confirm that we are prepared to lend you, subject to satisfactory searches and enquiries, the sum of £..,000.00, on the following terms and conditions :-

1. The loan will be secured by way of a First Charge on the property being Secured Property Address (“the Property”). This security together with any other security to be held by us, will secure all monies and liabilities from time to time due, whether actual or contingent.

1. The loan will be repayable at the expiry of .. months from the date of completion of the loan (the “Loan Repayment Date”), or earlier on demand where there has been a failure to make a payment as and when it falls due, or there has been a breach of a term or condition of the loan. For the avoidance of doubt interest is payable for the // month period, regardless of whether the loan redeems within this period and on redemption in full the sum of £…. is payable (representing ..months interest at the rate of ..%pmth).

1. The loan will be utilized by you for the following purpose :-

Business purposes for the development of .. dwellings for onward sale or letting and not for occupation by you or your immediate family

In the event following completion that we become aware that the loan has been used otherwise than for the purpose stated above, an act of default will be deemed to have arisen and we reserve the right to demand the immediate repayment of the loan together with interest, costs and disbursements then accruing.
The initial loan payment to be made to you will be the net sum of £..,000 (after deduction of interest per clause 4 (e) and all fees as per clause (5) and the balance shall be retained. The balance of the loan funds shall be paid in further instalments upon a satisfactory report from our surveyor and site visit by our representative and £… shall be payable by you at each stage release, together with the costs of updating the searches by our solicitors.



Signed …………………………. Date …………………...






4. a) The Standard Flat Rate of interest shall be …% per month until full repayment of the Loan is made. Interest will be charged at this rate on the principal sum, for the first calendar month, then at the same rate on the balance outstanding calculated and paid in advance at calendar monthly intervals.

1. Where, after the Loan Repayment Day has passed and you fail to discharge the balance due to us, then we will charge interest at the Standard Flat Rate of Interest until redemption.

1. At your request, a sum equal to .. months’ interest at the Standard Flat Rate of Interest shall be deducted from the loan and thus no monthly payments will be required during the Loan term.

1. The interest rate is fixed for the term.

1. Unless interest has been retained by us at your request, the first payment is to be made one month after the date of completion of the loan and subsequent payments are to be made on the corresponding day each month. Where the month has no corresponding day, the payment is to be made on the last day of that month.

Interest shall be charged on the full amount of the Loan referred to above, and such interest shall accrue on the amount in question on a monthly basis (as well after as before any judgment) from the date or last date for payment thereof to the date of actual payment, and such interest shall be compounded with monthly rests and shall be payable monthly in advance by the Borrower.

5. Fees:
The following charges will apply to this facility and will be deducted from the loan on completion. These are your responsibility, and are non-refundable:

• Legal Fees – £… plus VAT and outlays.
• Arrangement Fee - If the loan completes you will be liable for an arrangement fee of £///.
• Broker Fee - £… payable to The lender who is also the Broker
• Financial Adviser fee - £…
• Exit fee (payable upon redemption) - £…

Signed……………………………………… Date………………………….








6. Legal Fees, Charges and Disbursements:

These are your responsibility. Our solicitors will ………………………………………. They cannot act for you and will not offer you any advice in respect of this facility. The legal fees as specified in Clause 5 hereof shall be due and payable in full, whether or not the loan proceeds, and shall be paid within 14 days of demand. If the loan proceeds to completion, these will be deducted from the gross loan at completion.

Once completed, you will be responsible for all fees, charges and disbursements which we may incur in protecting the security or enforcing the security or Legal Charge and in its discharge. These will be added to the loan, and interest charged at the monthly rate and calculated daily will be applied.

7. Insurance:

It is a condition of the loan that the property must be kept insured at all times during the term of the loan to its reinstatement value against damage by fire and other perils, including malicious damage and other perils specified by us. If the property is not insured, or the level of insurance is insufficient, we can arrange suitable cover at your request. You will be responsible for the cost. We will ask you to authorise deduction of the premium from the mortgage proceeds.

8. Default:

Default will occur if :-

a) You fail to pay any amount (including interest) expressed to be payable by you pursuant to the terms of this Facility Letter or the Legal Charge secured by it at the time and otherwise in the manner specified in this Facility Letter.
b) You for any reason fail duly and promptly to observe and perform any obligation or undertaking expressed to be binding or undertaken by you pursuant to the terms of this Facility Letter or the Legal Charge secured by it.
c) Any representation or warranty given or made by you in relation to this Facility Letter or the Legal Charge secured by it proves to be incorrect, inaccurate, incomplete or misleading in any material respects.
d) A bankruptcy petition is presented against you, and/or in the case of a company, a Receiver is appointed or resolution for the winding up of the company is passed.



Signed …………………………. Date …………………...





e) You commence a meeting of creditors or propose making any arrangement of compensation or any assignment to the benefit of creditors.
f) You transfer, dispose of or threaten to transfer, dispose or otherwise deal with the security without our consent.
g) Where in the case of the facility being secured by second charge you fail to make payments or default under the terms of the First mortgage

In the event of default, where the default is capable of remedy, but not remedied within 14 days after the date of a written Notice from us or our Solicitors, or in the case of an act of default under Clause 8 (c) immediately, we may by return give notice to you to terminate our obligations hereunder and declare the loan to be due and payable, either immediately or upon demand and thereafter initiate court proceedings to enforce the Legal Charge.

9. Special Conditions:

a) Our solicitors must be satisfied in all respects as to the marketability of title to the security after having due regard to title documentation and all relevant searches.
b) We will require a professional valuation of the security, addressed to us, in a form acceptable to us. We may require additional specialist reports if recommended. –
c) We may from time, following drawdown wish to revalue the security. Should we do so, you must facilitate such valuation. The costs of any such valuation will be added to your account and interest charged thereon at the contractual rate. Where building/conversion works are to be carried out to the property, these are to be carried out to a proper standard by properly qualified contractors and all works are to be carried out in accordance with the planning permissions and consents. Thereafter you will maintain the property to a reasonable standard of repair. The costs of any such valuation will be added to your account and interest charged thereon at the contractual rate
d) That you have, or will contemporaneously with the mortgage advance, acquire good and marketable title to the security to the satisfaction of our solicitors

10. Assignment:

We may, for reasons of business efficiency, decide to transfer your mortgage to another Lender. If we do so, the terms and conditions will remain unchanged, save only that you will be required to make payment to the new Lender and not to us. If we do this, we will notify you on completion.



Signed …………………………. Date …………………...





11. Tenancies:

You may not create new tenancies, or renew existing tenancies without our previous written consent during the loan.

If the property is tenanted, and you do not tell us, or misrepresent the nature of the tenancy, this will amount to an event of default.

12. Renewal of Facility:

Should the advance not be completed upon 14 days of acceptance of this letter then the facility shall lapse. It may be renewed at our discretion, and we may require a further facility fee.

13. Jurisdiction:

This Facility Letter and any Security secured by it is deemed to have been made in Scotland and its constitution, validity and performance shall be governed in all respects by Scots Law.

Each clause and each subclause of this Facility Letter and any Security secured by it shall be separate, distinct and severable from each other clause or subclause.

Where any agreement, Undertaking or commitment is made on the part of 2 or more persons then the same shall be deemed to be given to such person jointly and severally.

14. Settlement:

Settlement must take place upon expiry of term or by redemption howsoever arising. You will be required to repay all monies outstanding together with the following: -

1) Legal costs of discharge of each security £…


All payments must be made in Sterling and via our solicitors, SOLICITORS Details of their bank details will be given on request.

All settlements must be made in the sum dated without set-off or counterclaim and free from and clear of any deduction.



Signed …………………………. Date …………………...




15. What Happens Next:

If after reading this letter you wish to proceed

1. You should take independent legal advice
2. Upon our receipt of the above we will instruct our Solicitor to enter into correspondence and deal with your solicitors in respect of documentation and their requirements

By signing this agreement you request and authorise us :-

1. If the Security is not to be a first mortgage, to pay any prior mortgage arrears;
2. If the property to be mortgaged is leasehold, to pay any rent, service charge or other

sums owed by the borrower which, if not paid, may result in the borrowers losing
the property. These payments will be made by the lender on the Borrower’s behalf
by taking adding them to the Loan Facility.


By signing the Facility Letter you declare and warrant that:

1. You have read and understood the terms and conditions of this Facility Letter and you acknowledge that you have been recommended by us to take independent (and, where there is more than one person borrowing, separate) legal or other appropriate professional advice on their contents, on the contents of any other documents that we require you to sign and in respect of the loan generally; and

1. You will be able to afford to repay the Loan as and when you are required to do so and the monthly instalments as and when they fall due.

1. You acknowledge that we have relied upon the declarations and warranties made by you in arriving at our decision to lend to you the sum stated above.

1. We reserve the right to alter the terms hereof or to withdraw this Facility at any time without assigning a reason. In the event of this Facility being withdrawn under this, or any preceding clause, we shall in no way be liable for any liabilities incurred by you.

1. The Standard security to be granted will be in standard Scottish format

Signed …………………………. Date …………………...






Declaration for exemption relating to business (Sections 16B and 189(1) and (2) Consumer Credit Act 1974)

I am entering this agreement wholly or predominantly for the purposes of a business carried on by me or intended to be carried by me. I understand that I will not have the benefit of the protection and remedies that would be available to me under the Consumer Credit Act 1974 if this agreement were a regulated agreement under that Act. You declare that you will not reside in the property at any time during the currency of the loan.

I understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the creditor and the debtor is unfair to the debtor.

I am aware that, if I am in any doubt as to the consequences of the agreement not being regulated by the Consumer Credit act 1974 I should seek independent legal advice.

I/we hereby accept the above offer of advance, the terms of which I/we fully understand and accept. I/we understand that any other parties concerned in this transaction are not acting as your agents and are not authorized to vary the terms of this offer in any way. I/we confirm receipt of a copy of this letter, which I have retained.

Please indicate your acceptance of the foregoing by signing and returning the attached copy of this letter.

ONLY SIGN THIS FACILITY LETTER IF YOU WISH TO BE BOUND BY ITS TERMS.

YOUR HOME IS AT RISK IF YOU FAIL TO KEEP UP REPAYMENTS ON A LOAN OR MORTGAGE SECURED UPON IT.

Should the facility not be accepted within 14 days, it shall lapse without prior recourse to you.


Signed …………………………………… Date…………………….

Signed…………………………………… Date………………………………

[cul8rm8e]

Re: Unsecured,Unregulated bridging Contract. is it fair?

just thought someone may be able to comment

[wales01man]

Re: Unsecured,Unregulated bridging Contract. is it fair?

You say UNSECURED then copy the document where it states Secured Property Address?

[cul8rm8e]

Re: Unsecured,Unregulated bridging Contract. is it fair?

Sorry, I meant secured, Unregulated.

[suffering]

Re: Unsecured,Unregulated bridging Contract. is it fair?

The key to your answer is written into the contract at the bottom;
I understand that this declaration does not affect the powers of the court to make an order under section 140B of the Consumer Credit Act 1974 in relation to a credit agreement where it determines that the relationship between the creditor and the debtor is unfair to the debtor.
You need a act of law to stand a chance of winning a case. This is your act of law

Other countries protect their people better against unregulated loans and lenders making loans fit into unregulated. The lenders know they can work the laws in this country to financially rape the inexperienced borrowers. They hide behind passing the blame to the broker and the solicitor that supposingly 'advised' you.

[cul8rm8e]

Re: Unsecured,Unregulated bridging Contract. is it fair?

There is now a very experienced solicitor dealing with this mess who is very confident its an open shut case.

thank you to everyone for your help and advice.

PS: As i have always said, I will expose everyone involved in this case along with the outcome once it has concluded, hopefully this will help others who may consider using these companies.