Before the court—real estate finance case law update

Before the court—real estate finance case law update

Charles Bezzant, partner, and Aselle Djumabaeva-Wood, associate at Hemlins, consider recent trends in relation to real estate finance case law and what might be on the horizon.

What have been the key cases in this area over the past 12 months?

There have been quite a few cases in relation to the recovery under personal guarantees given in relation to the borrowing from banks and private lenders but only a couple of those cases are in the context of real estate finance.

What themes are developing in this area?

This type of case is not uncommon after a recession, and the cases have inevitably taken some time to reach the courts. During difficult economic times, in relation to loans when full recoveries from borrowers have not been possible because of the fall in value of the properties, lenders have been faced with seeking to make good shortfalls in recovery from personal guarantees. This time around, the courts appear to have largely found in favour of the lenders. In fact, lenders have often been looking to seek summary judgment to enforce the guarantees. The most interesting cases in this area have come about when summary judgment has been granted by a court, and guarantors have sought to challenge it by presenting evidence that there might have been a misrepresentation on the lender’s part to induce the guarantor to enter into the guarantee, and/or that the guarantor only entered into the guarantee as a result of duress.

For example:

Bank of Ireland (UK) plc v Jones and another [2014] NIQBD 93

A default judgment given in favour of the bank was set aside because the guarantors contended that they gave personal guarantees on the basis of their understanding that their liability under those guarantees was limited. It was held that the court should determine the issues raised by the guarantors at a full hearing.

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About the author:

Neeta has been working as a paralegal in Banking and Insolvency for the past 4 and a half years.

She started her legal career at Allen & Overy in 2008 in the midst of the global financial crisis and the collapse of Lehmans where she gained most of her experience.

Neeta also did a short stint in litigation at the Revenue and Customs Prosecutions Office. Neeta graduated with a 2:1 honours degree from University of London, Queen Mary College and went on to obtain a distinction from the College of Law in the Legal Practice Course. She moved to Lexis®PSL in April 2013.