Bank unable to locate title deeds for 10 months. Can borrower claim damages for loss of sale?

C

CuriousCork

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A friend of mine went sale agreed on his property in June 2019. However, the bank could not find the title deeds for 10 months. Covid came along, and the purchaser disappeared. Does he have a claim against the bank? He has been unable to find a buyer since, and will not find one that matched the previous offer.
 
Yes, there was a mortgage remaining, which he was going to pay in full from the proceeds.
 
"Does he have a claim against the bank?"

Very unlikely.

The conveyancing process is full of moving parts and a transaction is not closed until it is closed.

mf
 
I agree the process is full of moving parts, but my friend's solicitor was unable to start drafting contracts as he did not have the title deeds. The purchaser was committed to buying the property, had paid a €10,000 deposit to the auctioneer and had funding available.

The solicitor's advice to my friend is that he is entitled to compensation. My friend is seeking re-assurance that his advice is correct.
 
mf1 said:
"Does he have a claim against the bank?"

Very unlikely.

The conveyancing process is full of moving parts and a transaction is not closed until it is closed.

mf
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Hi mf1,

Why not?

If a bank loses the deeds and an owner loses out as a result, how is that not an open and shut case where compensation is due?

Gordon
 
Gordon Gekko said:
Hi mf1,

Why not?

If a bank loses the deeds and an owner loses out as a result, how is that not an open and shut case where compensation is due?

Gordon
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They didn't lose the deeds- it took them 10 months to find them?

And it would be very difficult to persuade a Judge that that sale would definitely have gotten over the line, in any event.

Plus, in general, house prices have not softened since Covid. If anything, the opposite is the case.

mf
 
I respectfully disagree. If the bank’s actions or carelessness (otherwise known as negligence) led directly to the loss of the sale, then the bank will have a case to answer in negligence and/or breach of contract. The delay will suffice as grounds to base your case on.

Most sales proceed to closing, and all the Plaintiff has to prove is that it was more likely than not that the sale would have closed. So, the argument that it would be difficult to persuade a judge that the sale would definitely have closed doesn’t hold water.

That said, the Plaintiff will have some hurdles to jump to prove loss in order to claim damages. If the Plaintiff puts the property back on the market and sells for less than the previously agreed price, that would suffice but may or may not be worth litigating.

There’s also the whole question of what the amount of the loss is, as the vendor still has an asset of value notwithstanding the bank’s delay. The loss here is the loss of opportunity which is difficult to calculate.
 
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I’d be very surprised if a bank wasn’t in trouble in terms of negligence.

The bank have the deeds, they can’t find them, and a deal falls through.

Pretty clear-cut surely.
 
Gordon Gekko said:
The bank have the deeds, they can’t find them, and a deal falls through.
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There's no (legally enforceable) deal until contracts are exchanged.

I doubt the OP's friend would be successful in any legal action against the bank.
 
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It is well established that banks owe a duty of care to customers in certain circumstances. In ACC Bank plc. v, Fairlee Properties Ltd & Ors [2009] IEHC 45, Finlay Geoghegan J. found that the ACC Bank owed a duty of care to the defendants to take care with the custody of deposited title deeds, and in particular, to file and store the deposited title deeds. It was held that the bank had breached this duty by losing title deeds to certain properties and the plaintiff was awarded damages due to the losses suffered because of the bank's negligence. It is not difficult to see how a bank could be said to have fallen below the standard of care required in circumstances where it loses deeds.

In the Fairlee case the title deeds were found by ACC 2 years later. The case has been cited with approval in several other High Court cases since.

It is all about the balance of probabilities!

Jim Stafford
 
Jim Stafford said:
It was held that the bank had breached this duty by losing title deeds to certain properties and the plaintiff was awarded damages due to the losses suffered because of the bank's negligence.
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Yes but the OP's friend would have to demonstrate that he suffered losses because of the bank's delay in producing the title deeds.

There was no contract in place and we don't know whether or not the potential purchaser would have proceeded with the transaction if a draft contract had been provided at an earlier stage in the process.
 
CuriousCork said:
However, the bank could not find the title deeds for 10 months
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Was there a reason given for the 10 month delay? As in, did they just turn up within the banks paperwork.

I have a similar issue, only its the banks Solicitor that failed to send off the deeds to be registered. Property bought 18 months ago. Property is now sale agreed only for the Bank to say they never got the Deeds even though there was a Mortgage on the property at the time.

Pretty poor performance from both Bank and Solicitor

Solicitor though in fairness has fessed up to sitting on them. An avoidable delay for me all the same.
 
Advice to OP hire Jim Stafford, agree a fee, it’s worth a punt. And sort out the disgrace of Irish banks ‘losing deeds’ once and for all.
 
Thanks everyone for their comments, which has provided some reassurance. The auctioneer has advised my friend that the property, a retail unit, will not get as much as he was going to get from the original purchaser due to the impact of Covid on the retail sector.
 
Sarenco said:
There was no contract in place
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It is not necessary to have had a contract in place. It is all about "cause and effect" and the "balance of probabilities".

If you read the judgment (link below) you will note that Jerry Beades had no contracts in place for the sale of the apartments but he was able to prove enough to win a judgment of €4.7 million on his counterclaim.


In computing the counterclaim the bank customer should also claim for professional fees, rates, repairs, insurance, security etc until the property is actually sold.

Jim Stafford
 
Jim Stafford said:
It is not necessary to have had a contract in place. It is all about "cause and effect" and the "balance of probabilities".
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Yes but the OP's friend would have to prove, on the balance of probabilities, that the bank's breach of duty (if proven) is a factual causation of the losses which he suffered by reason of such breach of duty.

Without an enforceable contract in place it would be very difficult to establish, on the balance of probabilities, that the sale of the property would have completed at a particular price prior to the pandemic. As @mf1 says, the conveyancing process is full of moving parts and a transaction is not closed until it is closed.

I would also note that the absence of an enforceable agreement was a key fact in the failure of Fairlee's counterclaim in the judgment that you referenced. Jerry Beades' counterclaim related to an inability to refinance loans, the facts of which were not in dispute.

I'm not saying that the OP's friend has no grounds for taking an action against the bank. However, I think his chances of achieving a successful outcome are slim.
 
Quick update for everyone. My friend finally sold the property (a small retail unit) for €40,000 less than what he would have achieved if the original sale agreed went ahead. After some negotiation The bank agreed to knock €40,000 off the loan balance. A fair result.
 
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