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Duties on sale

This page deals with a number of cases and issues arising out of the duty of a mortgagee or receiver to obtain a proper price when selling the property.

Best price reasonably obtainable

Poor marketing

Meah v Ge Money Home Finance Limited
[2013] EWHC 20 (Ch)

Summary

The court dismissed a borrower’s claim that his lender had failed to obtain the best price reasonably obtainable on sale. Despite serious misgivings about the manner of marketing, the property had been exposed to the market and the eventual sale price was the best price that could have been achieved at the time.

Facts

The borrower defaulted in repayment of his mortgage to the lender. The property, described as a “somewhat dilapidated detached house” was repossessed in September 2005 and was put on the market with local agents at the beginning of 2006 at an asking price of £185,000. Within days they received offers at and above the asking price and after increasing the asking price to £245,000 they sold the property in March 2006 for £221,500 to a local developer who intended to convert it into five flats with basement office space, for which planning permission was swiftly obtained.

The borrower brought an action against the lender on the basis that they had failed to take reasonable care to obtain the best price obtainable. He produced a “residual development assessment” from an expert witness, which suggested that the market value of the property, having regard to its development potential, was about £325,000. He therefore claimed the difference.

Issues

There were three issues:
  • Did the lender breach its duty to take reasonable care to obtain the best price reasonably achievable for the property?
  • If so, did this breach result in the best price reasonably achievable for the property at that time not being achieved?
  • If so, what was the true market value of the property at the time of its sale?
Decision

The High court dismissed the claim and found for the lender.

As to the breach of lender’s duty to take reasonable care to obtain the best price reasonably achievable, it was possible to make a number of criticisms about what the agents had done. Despite the fact that there were no real ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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