2015 - 2016

Lending

Property lending

Mr G and his partner Ms L owned half-shares in their property. Mr G owned his share outright. Ms L needed a bank loan. She signed the loan agreement as the borrower, and Mr G signed as an owner of a share of the property provided as security for the loan. They granted the bank a mortgage over the property. 

On two subsequent occasions, Ms L applied to the bank for more money. The bank sent her loan documents to obtain Mr G’s signature. Instead, she forged his signature on the documents. The bank advanced the extra money. 

Later, the pair broke up and Ms L went overseas. 

Mr G went to the bank and explained what had happened. He said he wanted to take over Ms L’s loan so it would not fall into arrears while he and Ms L worked out what would happen with the property. 

Mr G decided to buy Ms L’s half of the property and put in loan applications to Ms L’s bank and another bank. Mr G accepted an offer of finance from the other bank. 

When Mr G’s lawyer asked the bank for the amount that needed to be repaid when the bank’s mortgage was discharged, Mr G found out about the extra loans to Ms L. He complained to the bank, but it said her loans would have to be repaid before it would discharge the mortgage. In order for his purchase of Ms L’s share to go ahead, Mr G paid the extra amount by borrowing more money from the new bank. 

Mr G complained to us. The bank subsequently sent Mr G copies of the contracts for Ms L’s extra loans. He disputed the signatures, and a document examiner engaged by the bank concluded the signatures had been forged.  

The bank conceded it had failed to follow good banking practice by giving the loan agreements to Ms L to obtain Mr G’s signature. It also conceded that, having given the documents to Ms L, it should have checked with Mr G that he was aware of the extra loan applications. It offered to settle the matter by paying him the value of Ms L’s extra loans, along with interest charged from when he refinanced the loan with his new bank (equal to about $20,000). Mr G accepted the offer.