Bridging loan disputes – securing a favourable outcome
We have seen an increase in the number of people getting in contact with us about issues with their bridging loans and have successfully acted in a number of these disputes against various aggressive lenders, securing favourable outcomes for our clients.
Case Example
A private individual entered into a bridging loan for a short period of time to ‘bridge the gap’ while he secured alternative finance. At the end of the term, the loan was redeemed in part but the lender had added various charges, interest and fees to the debt which meant the borrower could not redeem in full. Because the borrower had not redeemed in full, further charges, fees and a high rate of default interest rate were then applied, creating a very difficult situation for the borrower, as it potentially stifled a refinance. Court proceedings were issued prematurely, Receivers were appointed and we were instructed to defend the borrower.
We challenged not only the validity and enforceability of the various charges, interest and fees that had been added to the debt, but the basis on which Receivers had been appointed. We presented our client’s case in a robust manner and took a practical approach to the dispute, which resulted in the borrower achieving a significant reduction to the alleged debt.
What sorts of bridging loan disputes can we help with?
Our specialist Banking and Finance Litigation Team are experienced in dealing with and resolving bridging loan disputes for individuals, SME’s and companies. We can liaise with your lender where the term of your bridging loan has expired, but you are not yet in a position to repay, and we have experience of representing borrowers in possession proceedings issued by lenders.
We have previously written about the sort of issues we have seen and can help with. Some examples of issues we have challenged include:
- The validity and enforceability of penalty clauses, whether that be in relation to default interest or other excessive fees and charges being applied to a bridging loan by the lender;
- Onerous redemption clauses that make the loan especially difficult to redeem and are arguably a “clog on the equity of redemption”.
- Untrue statements made by a bridging lender to a borrower prior to them entering into a loan agreement. For example, in relation to the nature of the loan, how the terms would work or that a personal guarantee would be needed. If the borrower subsequently suffers a loss, there may be an argument for misrepresentation.
- The enforceability of personal guarantees. For example, this may be because the lender has not acted in a way which would entitle them to enforce, or perhaps if there has been some undue influence or illegitimate pressure exerted on the guarantor.
How can Ellis Jones help you?
Ellis Jones Solicitors are experienced in advising and dealing with disputes relating to bridging loans and as mentioned, have been successful in securing favourable outcomes for our clients in this area.
If you have an issue with a bridging loan, our Banking and Finance Litigation team would be happy to have an initial discussion with you to see how we can assist. Our team can be contacted via email at banking@ellisjones.co,uk, by telephone on 01202 525333, or by clicking on the “Make and Enquiry” button on our website.
About the authors
Henrietta is a Senior Associate Solicitor in our Banking & Finance Litigation department based in Bournemouth and acts on a diverse range of legal matters with particular specialisms in commercial disputes, health and social care disputes, banking and finance litigation and professional negligence claims.
Leah is a Solicitor in our Banking & Finance Litigation department based in Bournemouth. Leah acts on a wide variety of areas such as, gambling disputes, financial product mis-selling, mortgage mis-selling many more.
How can we help?
When you submit this form an email will be sent to the relevant department who will contact you within 48 hours. If you require urgent advice please call 01202 525333.
