Land Law

Question 2

Mr. and Mrs. Arnold purchased Ave More in 2010 for £250,000 and became the registered freeholders to the property. Their ability to purchase was underwritten by a secured loan of £75,000 against the property, through Bounders Bank. Mr. Arnold easily met the original mortgage repayments with his income as a specialist mechanic: He was employed at the renowned restoration firm ‘Vintage Auto Classics Ltd.’.

Last year he was given the opportunity to buy into that business for £100,000 and he made the decision to raise the money through another secured loan on the family home. Knowing that Mrs. Arnold would disapprove of such a risk, he asked his friend Carl, who works for another bank, to explain the loan ‘in a positive light’ to her and secure her signature on the mortgage documents. The bank received the documents, considered that Mrs. Arnold had been advised independently, and released the funds.

Vintage Auto Classics Ltd. subsequently suffered from bad press and poor management and, as a result, the business is due to close. Mr. Arnold can no longer keep up with the increased repayments on the mortgage and has no way of recouping his £100,000 investment.

Bounders Bank are seeking repossession of Ave More but Mrs. Arnold feels that she has been tricked by her husband and Carl. She also feels that the bank is behaving unconscionably in wanting to repossess and sell her home.

Please advise her as to;

i. what steps the bank can take in relation to the repossession and sale of the property to satisfy the debt,

ii. what she can do if she would like to remain in the property and pay off the arrears, and

iii. whether any defences are available to her in such an action.