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Development Loan - In need of real help!
amibeingrippedoff_2
Posts: 65 Forumite
in Loans
I will try and make this is easy as i can to understand, god knows I barely understand what on earth has happened. At the end you will see why i really need help. Anyway.......
I own a plot of land (bought with life savings)with all the permissions in place to build 2 semi-detached houses to sell. I set up a Ltd company who would sub contract the work out, all workers would be family and friends and my close friend would project manage the build.
I contacted what I thought was a very reputable company who dealt with all types of property funding (they dealt with everything for me) and I was offered from what they told me two lenders to do the build. One lender was financing it to wind and watertight stage (4 month contract) and the second lender from there till the end (a further 12 month contract to allow to finish and market them)
I made it clear to my finance adviser that both lenders had to be in place for it to work as i would not risk getting half way to find i couldnt continue, he assured me this is how it would be done. I was given all the terms from both lenders and asked him a few times to confirm everything was in order from both lenders, I was assured it was so i signed legals at the solicitors for the first lender and the work started.
The first lender was providing funds in two stages, first £??k to do underground work, a new valuation would be carried out and then the further £??k to build the timber frame. This is when things went bad.
Before i go further i need to explain that before i got any funding i met the lender on site, we had a long chat about who would build the houses telling him it would be family/friends and explained that the company was set up for this project and we would be making an application to NHBC to register the company and then at the end provide an NHBC structural warranty for both houses. everything was fine
Once the valuation was carried out on completion of the ground works we needed the second art of the funding to continue but this is when the lender decided to be a real nightmare. The lender contacted me and asked for our NHBC registration details, we gave him the details/ref of our application to NHBC. Shortly after this he wrote to me requiring that we provide a different Structural Warranty for the houses from the same company who was dealing with sourcing the funding and puting it in place for us. strange!
We explained to the lender that we told him that we cant provide a warranty certificate until the houses are finished and sent him over the stage certificate we got from NHBC to say everything had been done to satisfaction to the stage we were at. He still insisted that I purchase the other warranty from the other company and wanted to deduct the cost from the next stage of funding, I told him that we cant do that and if we did we would be short of funding to get to the stage for the second lender to take over and clear off the finance we got from him. Anyway, we were given an ultimatum, either authorise him to deduct the cost of the warranty or he would not give us any more funding. I was shocked at what was happening as everything was going to plan. All this was happening a couple of months after the first stage payment as we delayed things for a few weeks to get all the trades organised.
I contacted my adviser by email to tell him to contact the second lender and advise that we are having an issue with the build and there would be a delay in where we would require the funding from them, I didnt mention the fact that it was a problem with the first lender. Things really start to get worse.
I got a phone call from another adviser at the company to tell me that the adviser who had dealt with the lenders had left weeks ago and before calling me he checked up on my case and found that there was no funding in place with the second lender, he told me that there was a DIP made to the lender a few months ago and it was accepted, the DIP was only valid for 2 weeks but the adviser i used who was dealing with this from the beginning had never made the full application.:eek: i am now left with a problem from the first lender and no finance in place for the second lender. What had this guy done to me?????????
It becoming a big story so i will try and make the rest short and sweet!
The new adviser requested all my information i have provided to the other adviser and made an urgent full application, subsequently it was rejected:eek:
I done some searching on the internet on the first adviser as i was raging to find out that he was working for the first lender and had been since around the time i got the first stage funding from the first lender.:eek: i also found out he worked with the first lender for a few years earlier and he was only working at the company i applied for funding to for a few months.
Everything dragged on for weeks and now the first lender is seeking repossession of my land to sell and get his first stage funding back plus all fees.. It gets worse!
After many correspondences from my solicitor to the lenders solicitor and also a meeting between us all where nothing was resolved, the lender wouldnt budge. My solicitor advised that we would defend the repossession and sue the company who was supposed to have put all the fundng in place for me but i would need to fund the process:eek:
I contacted the legal aid board to see if i could get assistance and because i have a low income i was eligeable which made me feel at ease although still shocked at what was happening. I was told by the legal aid board to get my solicitor to make the application to them as i couldnt do it myself. here comes the really shocking part.
i contacted my solicitor and told them to apply for legal assistance but was told that if i wanted to pursue the case i needed t pay them as they wouldnt continue with the case using legal assistance. I am now thinking, how can things get any worse. but they do.
I need to mention now that before i applied for funding I got a valuation on the land and because i got full planning consent on the land for the two houses the value was £50k. During all this process i managed to get a copy of the valuation that the lender carried out after we completed the first stage of works and it was showing a current value of £40k:eek: To get to the first stage complete it cost £12k so i expected at worst a current value should be £62k. i am expecting at this stage if the lender repossesses the land he will sell it at his ridiculous valuation that he carried out. I decided to again have another independent valuation of my own worth the work done and it has come back at £72,500
I contacted another few solicitors who deal with legal assistance cases by email explaining my situation, all of which i have in writing from everyone but as yet i have had a number of replies telling me they are sorry for what has happened but they cant take on my case. (All of them asked for a copy of the contract)
I am wondering if my contract is so wide open that the lender was able to do what he has done and i dont have a leg to stand on, but this confuses me and begs the question, why was my original solicitor willing to defend my case and sue the company who dealt with my funding on my behalf.
Where i am just now:
I have no solicitor unless i find the money to pay him and even at that wondering if i could borrow the money should i use him?
The contract expired today and it looks like I will have my land repossessed and probably sold for peanuts and lose thousands of my life savings not to mention being chased for thousands from my credit accounts i have after purchasing materials for the timber frame before i completed the ground works so there was no delay.
Help!
I own a plot of land (bought with life savings)with all the permissions in place to build 2 semi-detached houses to sell. I set up a Ltd company who would sub contract the work out, all workers would be family and friends and my close friend would project manage the build.
I contacted what I thought was a very reputable company who dealt with all types of property funding (they dealt with everything for me) and I was offered from what they told me two lenders to do the build. One lender was financing it to wind and watertight stage (4 month contract) and the second lender from there till the end (a further 12 month contract to allow to finish and market them)
I made it clear to my finance adviser that both lenders had to be in place for it to work as i would not risk getting half way to find i couldnt continue, he assured me this is how it would be done. I was given all the terms from both lenders and asked him a few times to confirm everything was in order from both lenders, I was assured it was so i signed legals at the solicitors for the first lender and the work started.
The first lender was providing funds in two stages, first £??k to do underground work, a new valuation would be carried out and then the further £??k to build the timber frame. This is when things went bad.
Before i go further i need to explain that before i got any funding i met the lender on site, we had a long chat about who would build the houses telling him it would be family/friends and explained that the company was set up for this project and we would be making an application to NHBC to register the company and then at the end provide an NHBC structural warranty for both houses. everything was fine
Once the valuation was carried out on completion of the ground works we needed the second art of the funding to continue but this is when the lender decided to be a real nightmare. The lender contacted me and asked for our NHBC registration details, we gave him the details/ref of our application to NHBC. Shortly after this he wrote to me requiring that we provide a different Structural Warranty for the houses from the same company who was dealing with sourcing the funding and puting it in place for us. strange!
We explained to the lender that we told him that we cant provide a warranty certificate until the houses are finished and sent him over the stage certificate we got from NHBC to say everything had been done to satisfaction to the stage we were at. He still insisted that I purchase the other warranty from the other company and wanted to deduct the cost from the next stage of funding, I told him that we cant do that and if we did we would be short of funding to get to the stage for the second lender to take over and clear off the finance we got from him. Anyway, we were given an ultimatum, either authorise him to deduct the cost of the warranty or he would not give us any more funding. I was shocked at what was happening as everything was going to plan. All this was happening a couple of months after the first stage payment as we delayed things for a few weeks to get all the trades organised.
I contacted my adviser by email to tell him to contact the second lender and advise that we are having an issue with the build and there would be a delay in where we would require the funding from them, I didnt mention the fact that it was a problem with the first lender. Things really start to get worse.
I got a phone call from another adviser at the company to tell me that the adviser who had dealt with the lenders had left weeks ago and before calling me he checked up on my case and found that there was no funding in place with the second lender, he told me that there was a DIP made to the lender a few months ago and it was accepted, the DIP was only valid for 2 weeks but the adviser i used who was dealing with this from the beginning had never made the full application.:eek: i am now left with a problem from the first lender and no finance in place for the second lender. What had this guy done to me?????????
It becoming a big story so i will try and make the rest short and sweet!
The new adviser requested all my information i have provided to the other adviser and made an urgent full application, subsequently it was rejected:eek:
I done some searching on the internet on the first adviser as i was raging to find out that he was working for the first lender and had been since around the time i got the first stage funding from the first lender.:eek: i also found out he worked with the first lender for a few years earlier and he was only working at the company i applied for funding to for a few months.
Everything dragged on for weeks and now the first lender is seeking repossession of my land to sell and get his first stage funding back plus all fees.. It gets worse!
After many correspondences from my solicitor to the lenders solicitor and also a meeting between us all where nothing was resolved, the lender wouldnt budge. My solicitor advised that we would defend the repossession and sue the company who was supposed to have put all the fundng in place for me but i would need to fund the process:eek:
I contacted the legal aid board to see if i could get assistance and because i have a low income i was eligeable which made me feel at ease although still shocked at what was happening. I was told by the legal aid board to get my solicitor to make the application to them as i couldnt do it myself. here comes the really shocking part.
i contacted my solicitor and told them to apply for legal assistance but was told that if i wanted to pursue the case i needed t pay them as they wouldnt continue with the case using legal assistance. I am now thinking, how can things get any worse. but they do.
I need to mention now that before i applied for funding I got a valuation on the land and because i got full planning consent on the land for the two houses the value was £50k. During all this process i managed to get a copy of the valuation that the lender carried out after we completed the first stage of works and it was showing a current value of £40k:eek: To get to the first stage complete it cost £12k so i expected at worst a current value should be £62k. i am expecting at this stage if the lender repossesses the land he will sell it at his ridiculous valuation that he carried out. I decided to again have another independent valuation of my own worth the work done and it has come back at £72,500
I contacted another few solicitors who deal with legal assistance cases by email explaining my situation, all of which i have in writing from everyone but as yet i have had a number of replies telling me they are sorry for what has happened but they cant take on my case. (All of them asked for a copy of the contract)
I am wondering if my contract is so wide open that the lender was able to do what he has done and i dont have a leg to stand on, but this confuses me and begs the question, why was my original solicitor willing to defend my case and sue the company who dealt with my funding on my behalf.
Where i am just now:
I have no solicitor unless i find the money to pay him and even at that wondering if i could borrow the money should i use him?
The contract expired today and it looks like I will have my land repossessed and probably sold for peanuts and lose thousands of my life savings not to mention being chased for thousands from my credit accounts i have after purchasing materials for the timber frame before i completed the ground works so there was no delay.
Help!
0
Comments
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What does your financial adviser say if he arranged the lending as this seems to be where things have fallen down. You could try and sue the lenders and solicitors but its not an open and shut case and you'd need funding for that.
You could try and speak to self build lenders o brokers to see if they can advance to help out, though the security fro any loan doesn't look ver convincing at the moment.
You are effectively running a business, particularly as you've set up a separate limited company, and it sounds as though you never really had the liquid funds to undertake this development. A minor positive is that is it is all though the company then you shouldn't be personally liable for any shortfall but this still means losing your deposit and money and work so far.0 -
legal aid foe a ltd company to sue another company i dont think so. if you dont have the funds to sue then the law is out.0
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Sorry , I didnt explain the situation properly.
The finance was a personal finance. I set up a Ltd company which i am the sole director of and was using the company to undertake the project who would employ the sub contractors.
As for the financial adviser who was supposed to have set up both lenders and advised everything was in place left the company he worked for and is moved to employment with the first lender from what i gather immediately after i signed the legal docs with the first lender at my solicitors. I only found this out when i contacted the adviser by email to advise him i was having problems with the first lender to find out he had left weeks ago. thats when i done a bit of research and found out he left the company and was now working with my first lender as a Property Development Manager, his profile on LinkedIn doesnt even mention he was ever working with his previous company, the company i used to source and put in place the funding.
As for speaking to the lenders broker, the broker was company A and the lender was company B. Both of these companies as i found out are trading styles of another LTD company. So asking the broker to speak to the lender is not an option as i would be asking the questions to the same person who would answer them.
To be honest, all this sounds a bit surreal but it is in fact the case.
I have tried to figure out how n earth this has happened and what benefit was there to anyone. The only thing i can come up with is that. When i met the lender on site he told me that this type of project is not what he normally looks at and was doing a favour to the company i sourced the funding from (he knew my adviser well as he worked with him for a number of years earlier) What he told me at the meeting is that he normally steps in with funding projects at the point where someone cant get access to finance but it was very expensive 4% pm. My thinking is that when i got to the stage where the second lender would come in, the valuation report as i now know would not be sufficient for them to continue funding (LTV not acceptable) so i would have a dilemma of default on the loan or accept a ridiculous rate from him( effectively making the project very well worth his while) I ask myself then why would he require a different Structural Warranty put in place if it would never affect the funding he was providing as he would only ever see a staged warranty certificate? My only thinking is that he always had the intention to step in at that stage an the structural warranty would be very relevant if he funds to completion, again maybe the reason that the financial adviser knew he was moving to work with the lender and never intended to put the second lender in place for me and i would not have found this out until i got to the stage where i required the second lender funding.
Yes it sounds very ridiculous but i cant think of any other reason for what has happened. Why on earth would the lender look for another company to supply the structural warranty which was already started with NHBC and i had a stage certificate? Remember that the structural warranty he wanted put in place was again from the same company my adviser worked for and was well aware that the cost he wanted to deduct from my second draw down of funding would have killed the project due to the cost (thousands)
You just couldnt make this up!!!0 -
I'd be tempted to start legal action against your original fa as here is a clear conflict of interest and potential for fraud. This again needs finances so if you haven't got cash you are going to struggle.
My broker suggestion was for you to find one to see if financing could be sought, not those acting for the other parties.0 -
I suggest you find a building forum and ask the questions regarding the warrenty / legal side of things. In regards to FA isnt this sort of thing regulated? surely this first FA or company is liable somewhere - not for disclosing any interests in the lending company for example?0
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you raised personnel borrowing to fund a ltd company. thats not wise. your liability will remain even if the lts company folds0
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I'd be tempted to start legal action against your original fa as here is a clear conflict of interest and potential for fraud. This again needs finances so if you haven't got cash you are going to struggle.
It was with all intention to defend the repossession of the land due to the lender in breach of contract and only released 1/3 of the contracted amount then held us to randsome to pay for another Structural Warranty from another company. But, when i asked him to apply for legal assistance as we had put everything into this project the attitude changed. I am disgusted with that. I think it may be easy for a solicitor to take money from someone to take legal action and if it doesnt go as planned say sorry i was sure we had a solid case. I am sure the solicitor would have to convince to the legal aid board we had a very good cause to take action, maybe that s the problem which leads to me wondering what on earth is in the contract we signed? how risky was it? thats why i am seeking some help.My broker suggestion was for you to find one to see if financing could be sought, not those acting for the other parties.
Sorry. I have been trying very hard to seek other funding but been told if I was at the wind & watertight stage of the build it would be much simpler.
thanks0 -
I suggest you find a building forum and ask the questions regarding the warrenty / legal side of things. In regards to FA isnt this sort of thing regulated? surely this first FA or company is liable somewhere - not for disclosing any interests in the lending company for example?
Our solicitor did mention the point about "Conflict of Interest"
If i can only mention something really unbelievable. When we had a meeting with the lender I told him i was aware that MY FINANCIAL ADVISER from (company) is now working with him and has been from around the time i signed the legal documents for the fianance with him, his reaction was.
I DID NOT OFFER MR ......... A JOB! baring in mind he is the Director of the company with only one or two employees.
I asked him " How did my financial adviser become to be employed with you?........ very quickly he wanted to exit the meeting with an excuse that we are not getting anywhere here. He also mentioned he would try and sort things out on my behalf with he second lender i was dealing with as he has his own team there! MG is that the reason i was rejected the finance. He also suggested if he can sort out the second lender for me then he would forget about the whole issue of the Structural Warranty and move on. My solicitor gave him **** for that and asked the question "Why on earth are we having this meeting?" this is the whole reason we are in this position. Again avoided giving an answer.
There were so many other points raised at the meeting he didnt like to talk about. This guy gave us the story that he is an adviser who advises other advisers and deals with not Millions but Billions of funding. For what is to him a miserly £10k he travells up and down the country by train and taxi. Why would he not send an assistant to deal with such a small amount. As far as i am concerned the guy is an idiot who likes the sound of blowing his own trumpet.
I requested a SAR from my advisers company
An important factor in it was that the lender has written to my advisers company and suggested that everyone involved, including my second lender, to get MY file together, review it and make sure there is a full audit trail as it looks like we are going to litigate against them. My advisers company clearly didnt listen to the lender. I cant wait to hear his excuses in front of a Judge
There are many other things within this file that make the lender look really bad for the lender and the adviser.
I wonder what information will come out of the SAR I requested from both lenders and my broker, will it all match up or will things be changed or missing?
Sorry, I got carried away
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pauletruth wrote: »you raised personnel borrowing to fund a ltd company. thats not wise. your liability will remain even if the lts company folds
I was basically employing a company to deal with the build for me. The company just happens to be my company which i was a sole director of. No legal issues with this as i made all enquiries about my plans and it was all above board.
I wanted the company to complete the first project to have a bckground and then i was going to invest all personal proceeds into the company when the houses were sold then purchase the next plot to develop under the company name.
Anyway, this is not the issue here but thanks for your input.0 -
Would it be helpful to upload a copy of the facility letter i signed and maybe get some advice directly on the risks involved in signing it?
If anyone feels they have the expertise to comment just ask and i will upload it. i will remove all information about the companies involved
thanks0
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