Today I stopped a Scammer. And some of you may know who they are..

A new client called me today seeking lending for buying Care homes. This is a very difficult sector for borrowers given a very mixed past record and I had to be honest with him that even with a complete fair wind, the best we could achieve was commercial mortgage on the property for 70% LTV (probably les in truth) and some financing on any available debtors. Naturally the remaining 30%+ of then property value would have to be sourced from somewhere else and it would not be easy to ascertain where without any solid security. To put its mildly

He’s a very engaging client and we had a very decent conversation but he said that he had been offered a 100% loan to value “bridging loan” provided a “valuation fee” was paid upfront. He said he couldn’t afford the fee of £8k and hadn’t paid.

I said don’t pay it.

Im not an absolute expert on the property lending market and channel leads through an excellent partner who’s market knowledge is first class but I did know that this proposal sounded somewhat unlikely.

Discussed this with my partner who had of course never heard of such an arrangement, least of all for an MBI. You can see where this is heading

The £8000 “valuation fee” had to be paid upfront of course and apparently the report was to be be sent to the lender directly. Im not of course stating that the “valuation fee” is excessive and that it will be paid with no intention of completing the lend but…

I cannot name the people involved (on here) but this husband and wife team were involved in invoice financing in the past and I recall meeting them in my early days as a broker.

I wasn’t impressed then and I’m even less so now but I’m delighted to have scuppered their “proposal”

Ridiculous contract clauses. Are they enforceable?

The answer is no

It is commonly assumed that if any term ‘agreed’ in a contract is legally enforceable but thats simply incorrect. “Unfair clauses” are comfortably challenged and my view is that more often than not, the vendor knows full well that the idiotic clause within their contract would immediately perish like and ice cream in the Sahara under the heat of a court battle and would be promptly withdrawn

But that doesn’t stop vendors from ‘trying it on’ and believe me they do. What is perhaps surprising is that its often long established businesses hiding under a cloak of respectability who are the biggest culprits but what is less surprising is that they are frequently found in that most respectable of sectors, construction

Past examples have seen a very well know (but charmless and aggressive) building materials provider attempt to sneak Personal Guarantees within their contract. That was quickly thrown out in first test case. Even in, what many would say, is the second shoddiest sector of banking its understood that PGs have to be agreed to in a professional manner

The latest example is one that has been inflicted on a client of mine who has had his borrowing heavily restricted by his invoice finance lender (not my introduction) who frankly should know better. The clause states that if my client goes under then all liabilities cease. What total drivel and of course that is unenforceable

In this case I am working with my client to put pressure on or find an alternative. We will but how do we stop such nonsense giving lenders the perfect excuse to restrict lending at crucial times?

My solution is simple. Clauses such as these potential waste a lot of court resources but as with cancer, the problem is best caught early and I would make a range of clauses technically illegal (as the EU did with the assignment clause) and punishable by hefty fines