Bank did not renege on lending agreement

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Bank did not renege on lending agreement

Categories:

Mortgagee sales,

Summary:

Ana borrowed money from her bank to buy land to subdivide. The lending was approved and work began. The subdivision did not go as quickly as planned, and the bank requested she pay back what she had borrowed. Ana paid off some of the debt, and the bank agreed to lend her more to get a resource consent for the property. Having approval to subdivide can increase land value.

Published:

June 2014

Obtaining resource consent took longer and cost more than expected. The bank decided to lend her no more funds and to initiate a mortgagee sale, but Ana sold the property herself partway through the mortgagee sale process.

Our investigation

Ana complained to us that the bank had not lent her the extra money, as agreed. She also felt the bank’s property marketing was inadequate and resulted in a hurried private sale.

We were satisfied the bank had complied with its agreement for extra lending and could not find that the bank had acted wrongly when it moved to a mortgagee sale. Nor could we find that the property's marketing was inadequate because the property was sold privately two weeks into the bank’s six-week marketing campaign.