From what I saw the issues had escalated to a point where it went way past the actual problem, and became an issue of a clash of personalities….writes Suresh Vagjiani
Today we completed successfully on a funding which was not easy, the client had an offshore structure in an obscure jurisdiction and to further compound this issue, the managing agents had successfully managed to obtain a repossession order on all three properties owned by the offshore company.
The client was originally introduced as someone who had a funding requirement, one which required jumping through some hoops.
In short, there has been a dispute with the managing agents. From what I saw the issues had escalated to a point where it went way past the actual problem, and became an issue of a clash of personalities.
This perception was confirmed by professionals whom the clients had employed to help resolve the issues, during their efforts of resolution they came across an obstinance which seemed to place an obstacle wherever they could.
There was without doubt a minor breach of the lease, an internal reconfiguration which practically speaking did not affect anyone else; and was not therefore a major breach.
This got one of the members of the managing agent of the freehold committee up in arms.
He happens to be a British architect, retired with an abundant amount of time on his hands – As the saying goes, the devil finds work for idle hands.
The other aspect of the story is these clients own not one, but three flats in this block; perhaps a few too many flats for a foreigner; especially in a prime part of central London.
With these ingredients, they were not going to get an easy ride, and this pot was going to be stirred.
There were a series of incidents which indicate the board, controlled by certain personalities, are not looking for a resolution, but seem hell bent on persecution. They even took it upon themselves to inform the lender of the flats their loan security was in question, due to the breach in the lease. Whether they even have a right to do this is questionable.
As a result, the lender has made a demand for the full and final repayment of the loan. Thus, leaving the clients between a rock and a hard place.
As the properties are held in an offshore vehicle, and one which is currently not favoured by most lenders, though was done originally many decades ago, it wasn’t easy to identify a lender who would fund this proposition.
We managed to source a lender to refinance this, despite the offshore structure and the breach of the lease. Given the circumstances, they are lucky to be offered a solution.
The clients are frankly fed up with the situation and originally wanted out. Wishing to cut loose of their UK properties and sell all three of them.
Local agents who try to appeal end users and tend to achieve the best price promised them an over optimistic number which they didn’t achieve but instead wasted allot of valuable time.
Currently we are in a buyers’ market, one where only the most keenly priced properties will sell. By buying into the lofty promises of the agents the clients lost time, time and tide waits for no man, and the deadline from the bank is getting closer and closer.
I felt they needed to look at reality in the face and grab the bull by the horns, and suggested an auction previous to the remortgage. Only an auction with a realistic reserve price would cut this issue out – in the timescale required.
Auctioneers understandably don’t want to take something on they cannot sell, it doesn’t look good for the next auction. Therefore, they tend to favour low reserve prices which helps ensure the lot ends up selling.
The bottom line is the market will decide the price. So, even if the reserve price is low the market will dictate the selling price.
However, the reserve suggested is below what’s owed to the bank, therefore if it did sell the difference would require a top up by the clients.
One scenario is a low reserve will attract a lot of interest, build momentum and they will go for higher than expected. The other is they will not, given the current market sentiment.
Despite agreeing on a price the properties unsurprisingly didn’t sell, therefore the only solution was to have them funded. Which we managed to achieve, through a high level of control on the process. This included controlling both sets of lawyers – the lender’s and the client’s. Also vital to this case was the control of the valuer, meaning which firm and person was appointed. As the breaches had to be quantified, and this was vital to the case, by someone who was pragmatic, and not simply protecting his professional indemnity premiums.
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