News:

CREDIT CRUNCH– BEWARE!?

The sudden crises in the UK and world economies, the reduction in the value of property, the fall in the value of the pound and the revelation that your money in the bank is not nearly as safe as you thought it was, have taken almost everyone by surprise. In a very short space of time, property and investment values have changed dramatically. Lawyers dealing with financial claims consequent upon marriage breakdown must be alert to the established principle that assets should be valued, not when the parties separate, nor on a day which suits their particular case but at the date of trial or negotiation.

Therefore wherever possible, up to date valuations for all assets should be obtained. This includes pension CETVs – but this can be difficult – most schemes will only provide one free valuation per year. However, the cost of a second valuation may well be worthwhile. We live in exceptional times.

The need to obtain up to date information is just as great in cases of modest value as it is for wealthy couples. Failure to do so will almost certainly result in an unfair outcome for one party or the other – leading, at least, to an unhappy client and at worst, to a negligence claim.

Also, bear in mind the current reluctance of banks, building societies etc to lend money, before offers are made to pay a lump sum in consideration for the transfer of an interest in a property.

Make sure that:-

1.If your client is borrowing to fund a lump sum, the proposed lender is actually willing to provide the funds (and satisfy yourself that the terms on which such funding is offered are not prohibitive).

2.That if the other party is taking over the mortgage commitment, the lending institution concerned will agree to that proposal and will release your client from their obligations under the mortgage.

We live in a dangerous world.

November 2008

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