Company Sues Lender Over Changes in Their Refinancing Agreement

Michael Talve, CEO

Written by
— Updated on October 12, 2017

mortgage refinanceThis case involves two business owners who wanted to refinance their business property. The plaintiffs wanted to refinance with a limited recourse note, which would eliminate the possibility of personal liability. They went to a broker who recommended a company that gave the lowest quote. After the documents were signed, the company’s attorney emailed the plaintiff’s attorney a copy of the previously signed guaranty, with an additional full recourse loan term. The plaintiffs alleged that when the plaintiffs refused the full recourse loan guaranty, the company’s attorney changed the previous document signed by the plaintiffs from a limited-recourse to a full recourse loan guaranty. The plaintiffs claim this was contrary to their expressed wishes and contrary to their instructions and signing. The loan closed on the basis of the altered documents and the company disbursed the loan funds to the plaintiffs. The plaintiffs received the full set of closing documents including the limited recourse guarantee and it did not contain the language of the full recourse clause. At first, the plaintiffs were making payments on time. Then they stopped making payments when they experienced some hardships and needed the funds in escrow. They were not allowed to take them out, however, because they were defaulting on their loan. The plaintiffs allege that they were duped into a limited, nonfull recourse loan note.

Question(s) For Expert Witness

  • 1. Did the company, and their attorney, act improperly?
  • 2. Is it likely that the plaintiff can effectively argue the basis of their claim?

Expert Witness Response E-004505

I am an experienced real estate lawyer and have reviewed several cases that fall into this domain. The case facts that have been shared with me, so far, raise a lot of questions. If the lender changed the loan documents after signing, then that is clearly fraudulent behavior and I would easily be able to support the case. Still, the actual documents would need to be examined, and the timeline of the changing guaranty would need to be analyzed to fully understand whether the company and their lawyer acted improperly. I have direct, relevant experience as I have owned and presently own entities that have developed hundreds of millions of dollars in real estate and I have also worked with clients as an attorney in that context. I teach courses on finance and corporate law, and I have been deposed (and have testified) as an expert in approximately twenty previous matters.

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