Bank of Scotland, Whoops!

Kings Inns or bust

http://www.thejournal.ie/dublin-couple-vulture-fund-house-3009845-Oct2016/

Is my reading of this right? A did not properly transfer to B before B transferred to C? Nevertheless rather amusing all round. While I see this being touted as a 'free house' by some I understand it's just the repossession order being struck out?

Given the lack of locus standi for Tanager and 'A' no longer being in existence, apart from various people at Woods Hogan finding new gainful employment what happens now?

Peregrinus

The report is not entirely clear as to the facts. As far as I can make out, Mr and Mrs Reilly were sent a document to sign acknowledging that the debt was due to BoSI, but it's not clear whether they ever signed it. Whether or not it was signed, it seems nothing was ever registered showing BoSI as the mortgagee. BoSI then purported to transfer the mortgage to Tanager.

There are two distinct problems:

1. Tanager's situation. Not only do Tanager not own the mortgage over the Reilly property, but quite possibly many other mortgages are in the same situation. But Tanager paid BoSI for these mortgages. Can Tanager now sue BoSI to transfer good title? Or to recover the purchase price paid by Tanager? Is BoSI still an entity worth suing? Are BoSI in a position to correct the errors and transfer good title?

2. The Reillys' situation: They did in fact receive a loan, and they are in fact liable to pay it back. This hasn't changed. If they can't be chased by Tanager, then they can be chased by BoSI or by BoS. It's possible that the security for the loan - the mortgage - is dodgy, and may be difficult to enforce (if the loan was advanced by one entity and the mortgage is registered to another) but the loan itself remains outstanding and can be sued upon, and then the usual enforcement mechanisms (including a judgment mortgage) would be available. Plus, their house is probably unsaleable until they can get the confusing mortgage off the title - nobody will buy into this mess.

So, it's all a bit of a mess, and there aren't really enough facts given in the report to say how that mess might be sorted out. But it's unlikely to be sorted out by simply writing off the Reillys' loan and taking the mortgage off title.

Fred Swanson

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4ensic15

Fred Swanson wrote: »

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Maybe so, but what difference does that make?

Fred Swanson

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4ensic15

Fred Swanson wrote: »

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The problem in this case is that the current holder of the charge is not registered. No loss has been suffered on account of any earlier negligence.

Peregrinus

If I'm reading the rather unclear newspaper report correctly, the mortgage was originally documented (and registered) as a mortgage granted to BoS. At some point the BoS group decided that it should in fact be a mortgage granted to BoSI. Whether this is because they reorganised themselves by hiving the Irish business off into a separate entity, or because the original documentation was erroneous all along, or for some other reason, I can't say. In order to do this they asked mortgagors to sign a document acknowledging that their debt was due to, and their security was granted to, BoSI. It's not clear whether the Reillys ever did sign this document. If it was signed, it's not clear whether there was at attempt to correct the registration or whether BoSI just assumed that, holding this document, they could get the registration corrected whenever they wanted. It's not clear whether, when they bought the loan book from BoSI, Tanager appreciated that (at least) some of the registrations were still out of line, and whether they thought the documentation offered them would enable them to get that corrected, or whether they simply factored the risk into the price they offered. And of course we don't know whether the deal included BoSI giving any kind of representation, warranty or indemnity over this issue.

4ensic15

Peregrinus wrote: »

If I'm reading the rather unclear newspaper report correctly, the mortgage was originally documented (and registered) as a mortgage granted to BoS. At some point the BoS group decided that it should in fact be a mortgage granted to BoSI. Whether this is because they reorganised themselves by hiving the Irish business off into a separate entity, or because the original documentation was erroneous all along, or for some other reason, I can't say. In order to do this they asked mortgagors to sign a document acknowledging that their debt was due to, and their security was granted to, BoSI. It's not clear whether the Reillys ever did sign this document. If it was signed, it's not clear whether there was at attempt to correct the registration or whether BoSI just assumed that, holding this document, they could get the registration corrected whenever they wanted. It's not clear whether, when they bought the loan book from BoSI, Tanager appreciated that (at least) some of the registrations were still out of line, and whether they thought the documentation offered them would enable them to get that corrected, or whether they simply factored the risk into the price they offered. And of course we don't know whether the deal included BoSI giving any kind of representation, warranty or indemnity over this issue.

It was the other way around. the mortgage was originally registered to BOSI. BOS absorbed BOSI and BOSI ceased to exist as a legal entity. BOS never registered itself as holder of the charge but nevertheless transferred the former BOSI loans to Tanager. Tanager never became registered as holder of the charge. The charge remains registered as being to BOSI. Tanager didn't show in court how it acquired the charge since BOSI had ceased to exist before Tanager acquired the loan.
It will most likely be corrected by Tanager getting its paperwork in order. It will delay the whole process for some time.

Peregrinus

OK. On that basis I would say that the advisers to Tanager are in an embarrassing position. Unless, of course, they identified the problem and advised Tanager about it, and Tanager took an informed decision to proceed on the basis of some kind of warranty/indemnity from BoS. (And in fact I suspect it's quite likely that something like this did happen.)

Mr. Incognito

The Barrister and Solicitor appear to be recently qualifed.

It appears that the previous incarnation of Bank of Scotland was on the Folio.

Most likely the application to change the name of the institution had been lodged in the Land Registry and hadnt yet processed as the Land Registy take a LONG time to change anything.

I would presume that the Barrister and the Solicitor probably had very little actual conveyancing experience and presumed the previous name on the Folio had not been amended and seemed to want to blame the previous solicitor. Most likely the dealing to amend the title had been lodged and was being processed by the Land Registry. The Barrister should have either adjourned to take instruction or known her brief properly imo.

Unless of course it hadnt been amended and no application to amend had been made. The above is only my own conjecture from experience of Land Registry Dealings.

In any event the Bank will simply make the correct application to the Land Registy and reconstitue proceedings and bring fresh possession proceedings. It's only delaying the inevitable.

Robbo

Mr. Incognito wrote: »

The Barrister and Solicitor appear to be recently qualifed.

It appears that the previous incarnation of Bank of Scotland was on the Folio.

Most likely the application to change the name of the institution had been lodged in the Land Registry and hadnt yet processed as the Land Registy take a LONG time to change anything.

I would presume that the Barrister and the Solicitor probably had very little actual conveyancing experience and presumed the previous name on the Folio had not been amended and seemed to want to blame the previous solicitor. Most likely the dealing to amend the title had been lodged and was being processed by the Land Registry. The Barrister should have either adjourned to take instruction or known her brief properly imo.

Unless of course it hadnt been amended and no application to amend had been made. The above is only my own conjecture from experience of Land Registry Dealings.

In any event the Bank will simply make the correct application to the Land Registy and reconstitue proceedings and bring fresh possession proceedings. It's only delaying the inevitable.

They turn around transfer of charge applications fairly quickly and painlessly.

Forbearance

The problem for tanager ltd is that it cannot retrospectively get it's paperwork in order as BOSI no longer exist. Section 64 of the Registration of Titles Act states that only the registered owner of the charge can transfer the charge to a third party,( i.e. to Tanager ) This clearly cannot happen as BOSI no longer exist. Woods Hogan knew this and ceased trading for fear of being sued.

The Property Registration Authority ( PRA ) are currently conducting an internal investigation, as they have discovered that a lot of documentation on their files to be forged. Try going in there now, they ask you for two sets of ID, your signature witnesses by a Garda, and a recent bill. You have been warned, there is much more to come out in this regard and it not only effects Tanager customers. Wait till the papers get a hold of this story. ( or Mick Wallace )

Forbearance

To put it another way, at the date of transfer to Tanager Ltd, BOS PLC (and not BOSI or GCBOS), should have been registered in the PRA ( Property Registration Aurhority ) as owners of the charge on the Reilly's mortgage. This was not the case. Possible remedy, remote in this case, as the mortgage has been already sold on!

As a somewhat parallel; What would have happened if a company owned property and were dissolved without transferring it to anybody?

Fred Swanson

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Fred Swanson

Fred Swanson wrote: »

The property would become property of the minister for finance.

That used to be the case. Now it's the Minister for Public Expenditure and Reform and the Minister holds it on trust for the creditors entitled to realize any held security.

Forbearance

Getting back to the subject matter of the thread, in English v Promontoria Aran Ltd, the High Court Judge found that just because an entity is registered in the Property Registration Authority ( PRA ) as owner of the charge, does not guarantee that they have good title. Tanager, for example, are registered as the owners of the loan from BOSI. However, their title is not " perfect " as the previous registered owner should have been BOS PLC as oppose to BOSI or indeed GCBOS as was the case in many instances, including that of the O'Reillys. The problem for Tanager Limited is how do they rectify the problem. If the charge had not been sold, it would simply be a matter of BOS PLC lodging the appropriate fee with the PRA and amending the name of the registered charge holder, but seeing that the loan has already been sold on, I am afraid that rectification of title is far more difficult, if not impossible.

nuac

Forbearance wrote: »

The problem for tanager ltd is that it cannot retrospectively get it's paperwork in order as BOSI no longer exist. Section 64 of the Registration of Titles Act states that only the registered owner of the charge can transfer the charge to a third party,( i.e. to Tanager ) This clearly cannot happen as BOSI no longer exist. Woods Hogan knew this and ceased trading for fear of being sued.

The Property Registration Authority ( PRA ) are currently conducting an internal investigation, as they have discovered that a lot of documentation on their files to be forged. Try going in there now, they ask you for two sets of ID, your signature witnesses by a Garda, and a recent bill. You have been warned, there is much more to come out in this regard and it not only effects Tanager customers. Wait till the papers get a hold of this story. ( or Mick Wallace )

PRA ( formerly Land Registry ) used to send out a letter, entitled Forgery Notice, directly to any transferor.

This seems to have been discontinued about the time that the Registration of Title Act 1964 was commenced.

Perhaps time to review that.

Forbearance

Forbearance wrote: »

The problem for Tanager Limited is how do they rectify the problem. If the charge had not been sold, it would simply be a matter of BOS PLC lodging the appropriate fee with the PRA and amending the name of the registered charge holder, but seeing that the loan has already been sold on, I am afraid that rectification of title is far more difficult, if not impossible.

Sad. There is no suggestion, is there, that any of this mess was deliberate? Its a simple bureaucratic mistake and its quite obvious what was always intended by all parties to be done with these charges. I would hope that the law should be capable of finding an imaginative solution rather than say the error is impossible to fix.

Forbearance

Agreed, however solicitors charge huge "professional" fees to undertake such work and as such it should have been carried out correctly, with all the t crossed and i's dotted. I may be open to correction but I am assuming that Tanager must be able to sue someone ! Did Woods Hogan have an indemnity bond ?

Johnboy1951

Forbearance wrote: »

Getting back to the subject matter of the thread, in English v Promontoria Aran Ltd, the High Court Judge found that just because an entity is registered in the Propert Registration Authority ( PRA ) as owner of the charge, does not guarantee that they have good title. Tanager, for example, are registered as the owners of the loan from BOSI. However, their title is not " perfect " as the previous registered owner should have been BOS PLC as oppose to BOSI or indeed GCBOS as was the case in many instances, including that of the O'Reillys. The problem for Tanager Limited is how do they rectify the problem. If the charge had not been sold, it would simply be a matter of BOS PLC lodging the appropriate fee with the PRA and amending the name of the registered charge holder, but seeing that the loan has already been sold on, I am afraid that rectification of title is far more difficult, if not impossible.

Would it not be that, because the charge was not with the entity selling it, that the sale was void?
There is no indication that the O'Reillys did not sign the transfer document, that would still be valid.
Could then BOS PLC not rectify the registration and do a valid sale afterwards?
This would just delay repossession hearings, but the situation would be sorted correctly.

Of course if, as has been implied in a post above, there are many many more such mortgages then the costs of dealing with them will have to be borne by someone ....... I suspect the law firm who were at fault will have cover for that still in existence although the firm might have been wound up.

Fred Swanson

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Forbearance

Johnboy1951 wrote: »

Would it not be that, because the charge was not with the entity selling it, that the sale was void?
There is no indication that the O'Reillys did not sign the transfer document, that would still be valid.
Could then BOS PLC not rectify the registration and do a valid sale afterwards?
This would just delay repossession hearings, but the situation would be sorted correctly.

Of course if, as has been implied in a post above, there are many many more such mortgages then the costs of dealing with them will have to be borne by someone ....... I suspect the law firm who were at fault will have cover for that still in existence although the firm might have been wound up.

BOS PlC have employed Arthur Cox solicitors to attempt to fix this mess. Arthur Cox has already lodged several 100,000 euro with the PRA to re register all charges that BOS PLC currently hold into the name BOS PLC. There is no problem doing this, so as to become the registered charge holder of the charge as required by law ( if you wish to enforce your charge etc.) The problem is that BOS PLC cannot re register it's charge that has already been sold on to a third party, in this case Tanager LTD. The same difficulties would exist for the charges that were sold on to Lone-star, that were not re registered to BOS PLC prior to the said transfer.

Forbearance

Fred Swanson wrote: »

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I am wondering will the professional indemnity insurance cover such a large blunder ( possibly running into many tens of millions of euro )

Forbearance

Sorry the solicitors employed by BOS PLC where A L Goodbody and not Arthur Cox.

Forbearance

Look like the chickens have come home to roost, Tanager is now offering a 40% writedown on your tracker mortgage if you can buy them out. Does this make sense for a vulture fund to offer such a discount? The answer is no. Tanager originally bought these mortgage loans from Bank of Scotland PLC at 48% of their original loan value, a 52% discount. They have taken the best legal advices regarding their security over the charges and have found that they do not have good title. Hence they have no loci standi to seek enforcement of their alleged charge. All in all, they are trying to get out with the shirt on their back. Woods Hogan their original solicitors have ceased trading, with the partners now gone to William Fry and Reddy Charlton respectively. I would think that Woods Hogan's indemnity bond falls far short of the 311 million euro cost incurred by Tanager in the purchase of the mortgages from BOS.

ohnonotgmail

Forbearance wrote: »

Look like the chickens have come home to roost, Tanager is now offering a 40% writedown on your tracker mortgage if you can buy them out. Does this make sense for a vulture fund to offer such a discount? The answer is no. Tanager originally bought these mortgage loans from Bank of Scotland PLC at 48% of their original loan value, a 52% discount. They have taken the best legal advices regarding their security over the charges and have found that they do not have good title. Hence they have no loci standi to seek enforcement of their alleged charge. All in all, they are trying to get out with the shirt on their back. Woods Hogan their original solicitors have ceased trading, with the partners now gone to William Fry and Reddy Charlton respectively. I would think that Woods Hogan's indemnity bond falls far short of the 311 million euro cost incurred by Tanager in the purchase of the mortgages from BOS.

I think one of us has their maths wrong.
They purchased the loans for 48% of their value and want to sell them at 60% of their value? I think that makes excellent business. Its a very nice 25% mark-up.

Forbearance

ohnonotgmail wrote: »

I think one of us has their maths wrong.
They purchased the loans for 48% of their value and want to sell them at 60% of their value? I think that makes excellent business. Its a very nice 25% mark-up.

Maths class, for a start 60%- 48% = 12% not 25% ( in terms of their original value )

This 12% profit has been eaten up with the cost of paying HML for managing the loans, then transferring these loans to Lapithus which is a credit servicing agent of Apollo Global who ultimately own Tanager DAC. Now Lapithus has still to jump through the Central Bank of Ireland regulatory obligations to become fully licensed as a credit servicing agent ( that is not cheap ). Then there is the cost of trying to enforce these distressed loans through the Irish Court system ( again not cheap, and not very successful either ). This, coupled with Supreme Court Justice Mary Laffoy's determination in relation to being the registered owner of the charge in order to be able to enforce their security into the equation. All in all, Tanager will be lucky to get out of the original deal with the shirts on their back and that's only if the borrowers sign up to the deal.

Pat Mustard

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Pat Mustard

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