The full story of our fight is too detailed to go into here, and the story is still not done totally yet, but if you ever find yourself in anyway near as dire a situation, you may want to reserve an advanced copy of our book, due out next year – entitled ‘How To Get out of Debt while Still Living in it‘. As a similar victim you will automatically get offered a copy at a 50% discount, and resale rights.
Anyway, for two years, back in 2005, with me approaching 60, we had been slowly building up our investment property portfolio, including a dream retirement penthouse on a new Marina development near to our present home, and a superb large apartment in Bahama Bay in Florida. But then, we were seduced by very clever and expensive advertising, to buy a number of properties that on the face of it should have doubled our fortunes. One of our friends actually bought around $12 Million worth of these properties, and he was only earning around $40,000 or so a year! These properties, most with more than 4 rentable bedrooms, were all sold by the same developer, with Royal Institute of Chartered Surveyors (RICS) valuations, supposedly fully renovated, and fully tenanted with students, prior to completion, with a Landlord appointed by the developer pmon real.
Little did we realise, back then, the significance of that previous sentence. As all these properties needed Local Authority status of Multiple Tenancy, and had a landlord, appointed by the vendor, managing the tenanting of those properties. Unless the property had full Local Authority House of Multiple Occupancy (HMO) status, due to the 2004 Housing Act, it would not only have been illegal for a landlord to tenant such a property, but it would also have been illegal for the landlord to sell it to another Landlord. So – any mortgage issued to finance that property, would not be able to legally secure their debt against that property.
All of the law firms we approached for support here (mentioning no names), should have immediately seen, what BDO Stoy Hayward defined, after being instructed to investigate our situation by one major law firm, that “The Investors had all become victims of a particularly vicious and clever fraud.”
In hindsight, even full-page adverts in a very prestigious UK Sunday paper, promoting the above situation, was no guarantee that what is on offer was legal, but with RICS valuers involved, solid UK law firms handing the sales, where was the risk?
Well, the risk was that somehow the valuations were in many cases valued on an inappropriate commercial basis, using anticipated rental incomes and with a local authority status of multiple tenancy, so that valuation could have hardly been the REAL Mortgage Security Value. And, on top of that, the vendor was offering a 15% Gifted Deposit (which we found out later, proven by an SRA investigation in 2010) was dishonestly concealed from the lenders, by the vendor’s selected buyer’s conveyancer – not once, but in at least 452 occasions.
So – why did that dishonest act not invalidate the mortgage offers? And why did nobody pay attention to the SRA’s investigation?
Surely there are laws to stop this sort of thing happening (we thought). But it would seem that only if you have money do you have full protection in law. Thus, began a fruitless search of many large UK law firms, trying to find one that was willing to help us on a ‘no win, no fee’ basis. We found several major firms who agreed with us that “a very clever and deliberate fraud ” seemed to be in place. But would they help? No. But what they did tell us was that there would be a better chance if we could identify many similar wronged investors. It seemed then that we were doomed to accept our fate, unless we managed to jump over some quite massive hurdles. Even though we could see right was on our side, the law was not going to help us.