Bank at fault for not advising of new settlement date

Categories:

Other, Lending,

Summary:

Liam was unable to keep up repayments on his home loan, so the bank sold his home to recover the money it was owed. After the mortgagee auction, the bank advised Liam of the settlement date, that is, when the sale would formally go through and the new owners could move in. He had already moved out, although most of his belongings were still there. The bank subsequently brought forward the settlement date but didn’t tell him about the change. When movers came to collect Liam’s possessions, the new owners were already there and refused to let them in. The new owners also refused a later request to have Liam’s belongings returned to him.

Published:

May 2026

Liam was also unhappy about another matter. The day after settlement, the bank’s collection agency sent a letter to the address demanding repayment of a car debt and threatening repossession of the vehicle. Liam thought the car loan had been merged with the house loan and that, since the bank had sold the house, he no longer owed it any money. In addition, Liam was upset the bank had allowed the collection agency to send the letter to an address it knew he no longer lived at rather than try to communicate with him by email.

Our investigation

We found the bank should have notified Liam of the new settlement date. A person facing a mortgagee sale still owns the property and has the right to live there until the settlement date. The bank was entitled to agree to the purchasers’ request for an earlier settlement date, but it should have advised Liam of the new date so he could collect his belongings.

However, we considered the bank had contributed to only some of the losses – and significant inconvenience – Liam had suffered. In situations where there has been a communication issue about settlement dates, new owners are usually far more accommodating about allowing previous owners on to the property to retrieve belongings. We also noted that when Liam got in touch with the bank about his problem, the bank failed to contact the purchasers to persuade them to co-operate, nor did it contact the law firm handling the sale for the purchasers to see if it could exert any influence. The purchasers’ refusal to grant Liam access was a civil rather than legal matter, leaving him with no option but to issue court proceedings against the new owners.

We recommended the bank pay $5,000 towards Liam’s legal costs and $8,500 for the stress and inconvenience he suffered as a result of its poor communication over the car debt and new settlement date.