No structural survey done for mortgaged property

gigino

smccarrick wrote: »

Ok- so they don't want to pay for a professional opinion

As said before , his family paid a couple of grand for another solicitor to look at the matter but ( the solicitor ) wants more for baristers study / opinions. The legal system could soak up tens of thousands of euro, and who would they sue ( original solicitor, bank or who ) ?? .... ...so there would be no guarantee of getting any of that money back. The purchaser - not unreasonably -feels the "suits" have made enough out of the family as it is.

smccarrick wrote: »

What are you doing here?

I am only a friend of the purchaser, concerned for his health + well being. He and his family are decent people but not in to computers or internet ....if he was, he may not have been so foolish as to bid for the property in the first place. I was just wondering should the particular bank in question not share some of the pain/ loss - say 20 or 30% - as they failed to ensure a survey or even visual inspection of the inside of the house was carried out ?

Nevore wrote: »

As said above, the only risk a bank is open to is possibly taking the hit when someone declares bankruptcy.

Did I not read something in the papers a month or two ago about one of the ( foreign owned I think ) banks taking a small hit (maybe 10% of the value) if certain people quietly paid off their tracker loans in full now, as they ( the banks ) are losing money on such loans + just want out ?
e.g in certain cases, if the bank is owed a million on a property in massive negative equity, and there is a tracker mortgage / very low interest mortgage in place ( which is losing money for the bank ) , the bank will cut its losses by taking 900k cash to clear the loan ? Partial debt forgiveness - so in that case the bank is taking a hit without someone declaring bankruptcy, but for the bank it makes financial sense at this stage ( to get shot of the whole problem rather than continuing to lend to the purchaser at 2% or whatever ).

lomb wrote: »

Where is this derelict house located that has dropped 90+% in value?

I do not want to identify the exact location as I do not want to run the risk of identifying my friend / what I have said about him etc, but suffice to say its in a rural town which developed rapidly during the boom, but which is not feeling the pinch of the recession , to say the least. The property is about a hundred years old + derelict now .....its horrible and depressing inside ...the purchaser got a horrible surprise when he saw it for the first time after the mortgage had been arranged...it would not be worth doing up / modernising as close by in the town there are countless "far nicer" apartments / houses built in the boom, which are still empty / never occupied.

lomb wrote: »

Your friend probably paid a little over the odds when buying at THAT time. Someone had to have bid close to him to achieve the price paid. So that is what it was worth rightly or wrongly.

He paid a lot over the odds...he did not realise at the time when bidding that the other bidder was an adjoining property owner who wanted the property / site for development. Surely the bank should have valued it properly - or at least told him to look at the inside of the house - before selling him the mortgage ?

Victor

gigino wrote: »

No such valuation was done, and in fact the purchaser was discouraged / not even allowed inspect the inside of the building until the mortgage was completed.

I can't honestly believe anyone would do this when selling or buying. Can you imagine - "Here mister, I've a bar of gold in this bag. €50 only. But you can't look in the bag."?

lomb wrote: »

Where is this derelict house located that has dropped 90+% in value? I thought houses were only down 50%?

It may be that it was never worth what was paid for it on the open market.

gigino

Victor wrote: »

I can't honestly believe anyone would do this when selling or buying.

The purchaser was on anti-depressants + attending a phychiatrist on a regular basis ...he bought it at auction having only seen the outside of the building - he guessed he would spend a bit of money doing up the inside anyway but the auctioneer had assured him it was a good building inside, and the solicitor ( who profitted from the legal work ) had assured him he would get a big lump of money ( for a seperate compensation claim ) to redecorate the inside of the building etc. When he bid at the auction he could not really back out, and he got some shock when he saw the inside of the property once he got the keys + the mortgage had being arranged.

Do not forget these were celtic tiger crazy times - probably some other fools probably bought property off plans abroad without seeng the country , never mind the inside of the property.

Victor wrote: »

It may be that it was never worth what was paid for it on the open market.

In which case the bank should not have lent the money ? An interesting case.

Incidentally the auctioneer has admitted ( when the purchaser first tried to sell the property some years ago ) the price paid at auction was a "bit strong" ! Maybe it would not have been "as strong" if he did not hype up the property / area / market as much, but that was his job I suppose, he was acting for the seller.

lomb

He never even saw inside the house??
Thats completely nuts frankly.
What kind of financial position is he in other asset wise to clear what percentage of the loan? Debt forgiveness is probably a waste of time. The thing to do is allow them to sell the place by stopping all repayment of the loan and then allowing registering a judgement against him. Bankruptcy isnt as bad as it sounds, people in this country dont know how good they have it even potentially bankrupt ones! The government provides a living wage to every man woman and child that far exceeds any life standard that 4/5 of the world have. I suppose if he has any assets or freecash he should probably dispose of them somehow prior to bankruptcy but thats another matter.

The_Conductor

We really are going round and round in circles here.........

If you're looking for professional advice- you are going to have to pay for it.
If you want to continue this thread- I am going to move it to the legal forum.

Please advise.

It's an intriguing story. I am in no way a supporter of mass debt forgiveness, but lets just say that if this were me I would most certainly be pushing the whole "Wasn't mentally fit enough to enter into such a contract" angle and perhaps he may be able to scare the bank into taking what he has given them already and perhaps the value of the house as it stands as opposed to the chance of them being ordered to pay that money back to the "mentally unwell man".

ResearchWill

Rojomcdojo wrote: »

It's an intriguing story. I am in no way a supporter of mass debt forgiveness, but lets just say that if this were me I would most certainly be pushing the whole "Wasn't mentally fit enough to enter into such a contract" angle and perhaps he may be able to scare the bank into taking what he has given them already and perhaps the value of the house as it stands as opposed to the chance of them being ordered to pay that money back to the "mentally unwell man".

I would totally agree.

ionapaul

It is very clear what he needs to do - declare bankruptcy. That's what it is there for, if he will never be able to pay back the full amount he has borrowed + interest. No need for all the back and forth really, is there?

gigino

ionapaul wrote: »

It is very clear what he needs to do - declare bankruptcy.

Its a bit tough on him if he does, as he has worked hard all his life, and sunk his life savings, the medical compensation ( from a seperate matter ) and money from his parents in to the project - which means he has lost many hundreds of thousands. I am in no way a supporter of mass debt forgiveness , but if the particular bank in question acted irresponsibly in giving him such a large loan ( when other banks would not), without even a structural survey, valuation or evaluated plan to pay it back, should the bank not take some pain directly - now ?

Ray Palmer

gigino wrote: »

Its a bit tough on him if he does, as he has worked hard all his life, and sunk his life savings, the medical compensation ( from a seperate matter ) and money from his parents in to the project - which means he has lost many hundreds of thousands. I am in no way a supporter of mass debt forgiveness , but if the particular bank in question acted irresponsibly in giving him such a large loan ( when other banks would not), without even a structural survey, valuation or evaluated plan to pay it back, should the bank not take some pain directly - now ?

It has been explained NO. The bank is not responsible in any legal way as far as anybody here knows. If you want to keep this line of determination you need to get some legal advise from somebody who agrees.

People have been very clear that they do not believe the bank is responsible. So additional legal advise is what you need. You seem to think somebody is going to pop up with some magic solution. It isn't going to happen and if it does happen you will still need legal advise.

To be very clear I do not believe the bank acted irresponsibly in the manner you are suggesting. The survey is still not to protect your friend and it is not a loop hole you can use in the way you think.

What line of was the solicitor going for?

ionapaul

gigino wrote: »

Its a bit tough on him if he does, as he has worked hard all his life, and sunk his life savings, the medical compensation ( from a seperate matter ) and money from his parents in to the project - which means he has lost many hundreds of thousands. I am in no way a supporter of mass debt forgiveness , but if the particular bank in question acted irresponsibly in giving him such a large loan ( when other banks would not), without even a structural survey, valuation or evaluated plan to pay it back, should the bank not take some pain directly - now ?

The bank will take a lot of pain when he declares bankruptcy, don't worry! It's fair to think they won't get anywhere near 100% of the amount on their books for the mortgage back if the property is worth less than 10% of the price it achieved at auction.

Even if they reduced the mortgage by 10% now, could he possibly repay it, interest plus capital? If so, he's not really in such a bad spot after all. Though, why would he want to repay it, if he's left with something worth <10% of the money he's put in at the end of the process? Surely it is better for him, over the long run, to go to Britain and declare bankruptcy now? I posted two months ago about my (then) landlord doing the same thing, he borrowed €1m+ for a property currently valued about €500K; he declared bankruptcy in May in Britain, something that was the best move available to him to be honest! He'd never be able to get out from under the unsustainable debt, it takes a brave and smart man to realize this I think, and throw in the towel.

f9710145

Was reading through my mprtgage approval documentation the other day and came to a paragraph which mentioned the bank getting a valuation done. It speicified that this was NOT a structural survey, and that it is recommended that the purchaser get one done themselves.

gigino

f9710145 wrote: »

Was reading through my mprtgage approval documentation the other day and came to a paragraph which mentioned the bank getting a valuation done.

In this case the bank seemingly did not get a valuation done.

Neither did it get or see that a structural survey was done. If a bank was lending a million for a supercar, would it not get a valuation or see it had a guarantee or see that it mad a NCT / DOE or whatever ? Why should one bank(er) who acted irresponsibly get away with it when more prudent banks did not make this loan, at perhaps 30 times the persons annual salary? f

gigino

Ray Palmer wrote: »

The survey is still not to protect your friend

If one had been done it would have protected the bank as well as my friend. It was sloppiness on the part of the particular bank in question lending so much without a survey or valuation - they would not lend a 20th as much now for the same property I am sure. Something wrong there.

The_Conductor

gigino wrote: »

In this case the bank seemingly did not get a valuation done.

Why would they- he had already bought the property at auction. A valuation was irrelevant.

gigino wrote: »

Neither did it get or see that a structural survey was done.

Ditto- he already had bought the property. It was a fait accompli.

gigino wrote: »

If a bank was lending a million for a supercar, would it not get a valuation or see it had a guarantee or see that it mad a NCT / DOE or whatever ?

No it wouldn't.
You described the loan as a form of bridging finance- where the capital was due to be repaid by lumpsum on realisation of an asset.
The bank behaved pretty much as you expect them to in the circumstances.

gigino wrote: »

Why should one bank(er) who acted irresponsibly get away with it when more prudent banks did not make this loan, at perhaps 30 times the persons annual salary? f

His annual salary had absolutely nothing to do with this. From the little you've told us- this loan was not advanced by the bank as a conventional mortgage. It was a bridging loan, plain and simple. It has nothing whatsoever to do with his salary. The first couple of lending institutions likely baulked at the asset (the insurance claim) not at his salary.

You really are going round and round in circles here.......

Dades

gigino wrote: »

Why should one bank(er) who acted irresponsibly get away with it when more prudent banks did not make this loan, at perhaps 30 times the persons annual salary? f

Who is getting away with what?

For his part in the debacle your friend will probably have to declare bankruptcy, and for their part the bank will never recoup most of the money they loaned out.

There are no winners or get out clauses for your friend OR the bank.

Ray Palmer

gigino wrote: »

If one had been done it would have protected the bank as well as my friend. It was sloppiness on the part of the particular bank in question lending so much without a survey or valuation - they would not lend a 20th as much now for the same property I am sure. Something wrong there.

It might not have. It has been stated it would not have been a structural survey. His plans to do he property up may have qualified for the loan.

Your defense and claim on the bank are simply not valid no matter how much you protest. What you "think" (you can't be sure) is irrelevant.

The bank may possibly have broken their own policy not a legal requirement. It is not a valid legal defense. What are you going to do if this goes to a judge and he simply dismisses these claims? He isn't going to argue with you. You have been repeated told and had it explained why this is not valid. Do you understand that people just don't agree with you and no matter how you word it and come up with a scenario?

You are not finding out anything here you are ignoring the answer.

djmcr

Ray Palmer wrote: »

you are ignoring the answer.

I think he knows the answer but is desperately clinging on for some bit of hope of a way out other than bankruptcy

gigino

"In this case the bank seemingly did not get a valuation done."

smccarrick wrote: »

Why would they- he had already bought the property at auction. A valuation was irrelevant.

A valuation would have been very relevant, because if it was properly valued or a structural survey done, the bank in question would have behaved as the other banks approached ; they would not have lent the money. There was no onus on a "new bank to the purchaser" , with whom he had no track record, to fund his crazy purchase. Thats why a valuation / structural survey should have been done. If it was done , it would have protected the bank - which is now losing / will lose on it, and in turn is having to be bailed out by the taxpayer. All because the banker behaved recklessly. My friend + his family also lost a lost of money ( many hundreds of thousands ) on the whole episode because the bank in question - for a few years - did not behave as one would have expected a bank - here or abroad - to.

The_Conductor

You really are desperately trying to play the blame game.
The short and simple is- we are not financial professionals.
We do not know all the details.
From the limited that we do know, we are suggesting that your friend declare bankruptcy.

You can go around the houses as much as you like- and you certainly are going around and around- but we're not getting anywhere......

StillWaters

I am frustrated having read this thread, and your refusal to listen to what everyone is saying.

There may very well be a test case in Ireland in the future, where a person who borrowed recklessly sues their bank for lending recklessly. I can't see it being sucessful, and of course in order to take such a test case, you would need a substantial amount for legal fees.

Ray Palmer

gigino wrote: »

"In this case the bank seemingly did not get a valuation done."

A valuation would have been very relevant, because if it was properly valued or a structural survey done, the bank in question would have behaved as the other banks approached ; they would not have lent the money. There was no onus on a "new bank to the purchaser" , with whom he had no track record, to fund his crazy purchase. Thats why a valuation / structural survey should have been done. If it was done , it would have protected the bank - which is now losing / will lose on it, and in turn is having to be bailed out by the taxpayer. All because the banker behaved recklessly. My friend + his family also lost a lost of money ( many hundreds of thousands ) on the whole episode because the bank in question - for a few years - did not behave as one would have expected a bank - here or abroad - to.

It is a bank policy not an obligation. It remains irrelevant. Yes you have seen why it should be done but you have put too much reliance into it. It may not have found the problem because even if they insisted it would NOT have been a structural survey. It thus may not have identified. There is no onus in law for the bank to insist on the survey.
Yes it would have been prudent of the bank but it is not a requirement. Yes they will lose but they aren't going to take any additional loss from your friend.
Lets be very very clear, your friend is the one who acted recklessly the bank were not prudent huge massive difference.
Banks do and will continue to give mortgages to people without a property valuation survey. It is not correct to say they never do this or that it is unique to Ireland.

gigino

Ray Palmer wrote: »

Banks do and will continue to give mortgages to people without a property valuation survey.

But ( before lending a mortgage ) do not most banks - if not all banks - usually look for a valuation, and a structural survey ( they are seperate things ), especially if the property is 100 years old ???? 80% of the time / 95% of the time / 99.9% of the time ?? I ask this in good faith as I do not know - unlike probably some of the posters here I am not a banker, and I do not work in the property / mortgage / financial services industry.

Its a long time since I got a mortgage, but the bank manager insisted a structural survey was done, and a valuation, and there was no way I would have got 30 times salary as a loan.

Ray Palmer

gigino wrote: »

But ( before lending a mortgage ) do not most banks - if not all banks - usually look for a valuation, and a structural survey ( they are seperate things ), especially if the property is 100 years old ???? 80% of the time / 95% of the time / 99.9% of the time ?? I ask this in good faith as I do not know - unlike probably some of the posters here I am not a banker, and I do not work in the property / mortgage / financial services industry.

Its a long time since I got a mortgage, but the bank manager insisted a structural survey was done, and a valuation, and there was no way I would have got 30 times salary as a loan.

Jasus you just don't get it.
People here are not as you describe them
It doesn't matter what they do are what they can do they don't have to. They didn't and it does not make them liable, your friend is liable and made all the mistakes. If your friend falls into the 0.000000001% that is where he is. Tell him to get legal advise and say goodbye to what he has spent on the property.
I find it very hard to believe anybody would go on like this for a "friend". Take care of yourself and realise this is not the end of the world just a series of bad choices

MOD: You should close this the guy is refusing to listen

Head The Wall

gigino wrote: »

"In this case the bank seemingly did not get a valuation done."

A valuation would have been very relevant, because if it was properly valued or a structural survey done, the bank in question would have behaved as the other banks approached ; they would not have lent the money. There was no onus on a "new bank to the purchaser" , with whom he had no track record, to fund his crazy purchase. Thats why a valuation / structural survey should have been done. If it was done , it would have protected the bank - which is now losing / will lose on it, and in turn is having to be bailed out by the taxpayer. All because the banker behaved recklessly. My friend + his family also lost a lost of money ( many hundreds of thousands ) on the whole episode because the bank in question - for a few years - did not behave as one would have expected a bank - here or abroad - to.

You stated that your friend was bidding against a guy who owned property adjoining this and wanted the property for development purposes. So he effectively paid a development price for a property that he wanted to live in.

Do you realise how crazy this sounds and you want to blame the bank:mad:.

A lot of people got carried away in the property market but they usually borrowed the bulk of the bank to do so initially, it sounds to me like your friend already had some money of his own and decided to jump on the bandwagon and started bidding against a developer, he obviously hadn't a clue about the value of what he was buying. After then committing his own money he went looking for more and got it.

There really is no one else to blame here but your friend. As has been stated he received a bridging loan from the bank, they may have viewed the property he bought as having development potential and may have valued it themselves on that basis little realising that your friend planned on living in it.

Stop looking for other people to blame, I can understand your friend looking for someone else to blame but you should see sense better than him unless you and him are the same

astrofool

gigino wrote: »

But ( before lending a mortgage ) do not most banks - if not all banks - usually look for a valuation, and a structural survey ( they are seperate things ), especially if the property is 100 years old ???? 80% of the time / 95% of the time / 99.9% of the time ?? I ask this in good faith as I do not know - unlike probably some of the posters here I am not a banker, and I do not work in the property / mortgage / financial services industry.

Its a long time since I got a mortgage, but the bank manager insisted a structural survey was done, and a valuation, and there was no way I would have got 30 times salary as a loan.

Structural surveys are not usually required by a bank before getting a mortgage. Doesn't matter on the age of the property.

The fact that it went for auction also negates a valuation, the auction set the open market value of the property, rendering an independent valuation meaningless, and even if it had been valued, it would likely not have found the structural defects, valuations are based on location, area of land and size of property (e.g. 4/5 bed).

The amount of the loan doesn't matter, it was based off your friend getting a large compensation payout, doesn't matter if I earn €50 a week if I'm expecting €1m in a few weeks time, happens all the time in the case of inheritances coming through, or other assets being sold.

The_Conductor

smccarrick wrote: »

We really are going round and round in circles here.........

If you're looking for professional advice- you are going to have to pay for it.
If you want to continue this thread- I am going to move it to the legal forum.

Please advise.

OP- In the absence of a response to this, I am closing this thread.

Kind regards,

SMcCarrick