Clydesdale Bank

[Flivoless]

Six months ago I agreed a development loan with Clydesdale for the purchase of some land and the contruction of a new house. They took their enourmous "arrangement fee" up front and I have been covering the interest whilst planniing approval was sought. The agreement states that once the build is started (it could have started 2 months ago!) the interest would roll-up until the new house was either sold or let. Clydesdale have prevaricated for the last two months on allowing the first draw-down to enable the build to start but have now, at the 11th hour, said that they "don't think that conditions are right to commence the build". I have, quite justifiably, commited (and spent) money on the basis that the facillity (fully secured incidentally) was in place so their unilateral movement of the goal post has left me in a vulnerable position. I know of another recent instance where Clydesdale withdrew from an agreement just two days before the draw-down was due. I am considering legal action so would be interested to hear from anyone else that has suffered in a similar vein due to Clydesdale's actions.

[Guest Old_andrew2018]

Good Luck

[caro]

Sounds a nightmare for you. Had they confirmed in writing that the money was ready to be drawn down, or did you jump the gun a bit? Was this personal financing or a business transaction? I'm guessing the arrangement fee is meant to be non-refundable even if the loan isn't agreed.

[Flivoless]

This was a development loan that was fully agreed and indeed the first draw-down, to purchase the land, has already been effected. I would add that Clydesdale also had a first charge over our existing property, value circa £1.1m as well as the 7.5 acre plot. The most gaulling thing is that they are quite happy to maintain the loan for the land purchase - and luxuriate in receiving the interest each month - but not the further tranche to enable the build to take place. This action is preventing me from earning any money from the project, whether that be by selling the new house (or my old one) or by letting it when it's finished. They are also insulting my inteligence by trying suggest that their action is in my interests as, "the time is not right to build", whereas in reality it is only benefits Clydesdale.

[caro]

Is there anything in the contract that allows them to do this?

[Flivoless]

Nothing I can see

[caro]

Sounds like it might be a breach of contract to me then. I'm trying to get some opinions for you. Have you complained to the bank about this? The trouble with a court case, or going to FOS is that these things would take time, and in the meantime it's costing you money.

[Flivoless]

Oh yes, I have complained very strongly and have aksed them, on several occasions, to justify their unilateral decision to effectively cancel our agreement. So far all I've had is some pretty lame excuses that do not stand up to careful scrutiny.

 

THis morning I have had an "answer" to my demand for part of the intitial arrangement fee to be refunded. ON the one hand they have agreed to refund £8k but then they would want a new agreeement to extend the (reduced) facility for 1 year and of course another arrangement fee. The net result of this would be that it would actually cost me an additional £3k over and above the £8k refund. So they are suggesting that instead they will waive the "new" arrangement fee, but keep the £8k, if I re-sign for the 1 year agreement. Wow that's really big of them!

[caro]

I've moved the thread to the legal forum as you may get more advice here.

[Flivoless]

Thanks, it's much appreciated.