As I discussed in a previous post on discovery and attorney-client privilege, when lenders attempt to collect more than the collateral, income property borrowers almost always raise a wide range of defenses and counterclaims. The list below covers the most common ones.
Few lenders go into litigation knowing they’ve done anything wrong, and borrowers are rarely successful in obtaining substantial damages. However, lenders need to understand that their handling of the loan and borrowing relationship will be examined very thoroughly. The borrower’s counsel is looking for leverage to force a favorable settlement, and there are few loans which are documented and executed flawlessly. I will be discussing some of these claims in more detail in subsequent posts.
- Bad faith
- Breach
- Breach of commitment to fund or extend loans
- Breach of confidentiality
- Breach of contract
- Breach of fiduciary duty
- Breach of good faith and fair dealing
- Breach of interim agreements (final agreement differs)
- Breach of oral commitments
- Defamation
- Detrimental reliance/Fraud in the inducement
- Duress
- Estoppel and waiver
- Failure to comprehend documents signed
- Fraud
- Inconsistencies between written agreement and course of conduct
- Intentional affliction of emotional distress
- Interference
- Interference with contractual affairs
- Interference with corporate governance
- Misrepresentation
- Negligence
- Negligent denial of loan
- Negligent grant of loan
- Negligent Loan processing
- Negligent Misrepresentation
- Negligent Servicing/Administration
- Overreaching and Unconscionability
- RICO Violations
- Fraudulent rate of interest
- Refusal to extend credit
- Third party causes of action
- Control of borrower (third party damaged)
- Fraud
- Good faith and fair dealing - third party creditor subordination
- Tortuously inducing breach of contract
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