bought a commercial buy-to-let property with some others a few years ago. We’ve always met the repayments on this loan but one of us has defaulted on the repayments on an unconnected loan and the bank has appointed a receiver to the commercial buy-to-let property. Is the bank within its right to do that? If so, is there any way this could be resolved without us losing the property? Seamus, Athlone, Co Meath GENERALLY speaking, most terms and conditions of a loan contain what are called Material Adverse Conditions (MAC) clauses — which set out the parameters under which a bank may call in the loan and appoint a receiver. Whilst the bank may have been legally entitled to call in the loan, it should have first complied with the Central Bank’s code of conduct on lending to small and medium enterprises (SMES). It was introduced to provide SMES some breathing space in dealing with any loan arrears. The code operates in a similar fashion to the mortgage arrears resolution process (MARP) for home owners.
Some banks deal with breaches of MAC clauses differently. Those banks which have decided to exit the Irish market place will seize upon any opportunity to call in a loan and appoint a receiver. If you are dealing with a bank that has decided to exit the market, you face an uphill struggle. You should seek legal advice as to whether you have good grounds to obtain an injunction restraining the receiver from selling your property.
If the bank’s motivation was to sell the property and release any equity in it so that the defaulting partner’s debts could be paid, then the bank might entertain a proposal from the remaining partners to contribute sufficient cash to ‘buy out’ the equity.