Woman hit with $320,000 debt

[muppet]

Woman hit with $320,000 debt

4:00AM Sunday Nov 01, 2009
By Anna Rushworth An Auckland woman has been lumbered with a $320,000 debt after she claimed she was conned into buying a house at an over-inflated price.
Helen Rutherford bought the house in Meadowbank for $300,000 more than its worth.
Rutherford was taken to the High Court at Auckland by ANZ National over a loan for the house, and lost.
She told the court she agreed to buy 50 Temple St in Meadowbank on April 5, 2007, from Vijay Enterprises for $850,000.
She said she did not know the house was worth only $550,000.
Real estate agent Philip Cavanagh arranged an $800,000 loan so she could buy the house from his associate Raghu Aryasomayajula.
However, Cavanagh has since been declared bankrupt, leaving ANZ National to chase the money from Rutherford.
The bank pre-approved a loan of $427,000 to Rutherford, whose income was $50,000 a year. Days later she and Cavanagh - then an agent for Barfoot and Thompson Mt Albert - applied to the bank for the $800,000 loan.
Cavanagh arranged for her to see lawyer Andrew Lemalu to sign a loan agreement.
She did not realise Lemalu was his own lawyer as well as Aryasomayajula's, and she signed a separate waiver for independent legal advice.
Rutherford was then told that Cavanagh was joining her in the loan because her income could not service the monthly repayments of $6300.
But after just a few months the pair defaulted on the loan repayments.
In agreement with the bank, 50 Temple St was put up for sale. It sold in December 2007, but for only $575,000, leaving the bank short by $276,436.
In his judgment, associate judge David Abbott described how in court Rutherford argued the bank should have ensured she got independent advice before agreeing to the loan.
She claimed Cavanagh exercised undue influence in getting her to buy the house, a claim that the bank and Judge Abbott rejected.
"On its face it was a joint enterprise with apparent benefit to Ms Rutherford.
"Based on the same analysis, I do not consider that it would be unconscionable for ANZ to rely on its rights under the loan agreement and the mortgage."
Rutherford is now left with a $320,000 bill made up of the $276,436 shortfall, plus $34,099 in interest and $7680 in costs.
In August 2008, Cavanagh, Aryasomayajula and Barfoot agent Phillip Niall appeared before the Real Estate Agents Licensing Board. All were later banned from working in real estate for life.
- HERALD ON SUNDAY

http://www.propertytalk.com/forum/newthread.php?do=newthread&f=58

[flyernzl]

Its a shame that people get hit like that.

Nevertheless I think that the judge made the right call. She became involved in this deal of her own free will, presumably hoping to make some money out of the property. If you take the chance to make a profit, you also take the chance of making a loss. If she had made a profit on this deal, I don't think she would have complained to anyone.

"Fools and their money are soon parted".

[freezinhot]

Ridiculous outcome!!

When spending that sort of money one would expect to either A) become an expert on prices in that area, or B) get at least 2 different valuations from 2 independant sources.

Its not rocket science, is it?

FH

[mortgage broker]

Surely there is something more sinister happening here than the outrageous stupidity being portrayed.

[Austrokiwi]

My opinions oscillate between extreme right and moderate left. It is easy to feel sorry for the woman in the story and one wonders how the courts and law makers could assist her. BUT hold on.... this woman couldn't afford the property in the first place, in fact to purchase it she had to enter into a shonky deal with a realestate agent. Clearly there was something motivating her; Greed. She ignored the first warning sign, that of not being able to afford it. I think she completely missed the second warning sign; she then entered into a commercial relationship with the agent involved with selling her the property.

In this case economic darwinism applies, she got what she deserved.