ARTICLE · 20 JULY 2006

If All Else Fails, The Property Can Be Sold, Right?

Gadens Lawyers

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A borrower who signed a loan application that falsely recorded his income has successfully appealed to have his loan contract and mortgage set aside. He had borrowed the money, using his family home as security, to invest in the failed business ran by Karl Suleman.

AustraliaStrategy

A borrower who signed a loan application that falsely recorded his income has successfully appealed to have his loan contract and mortgage set aside. He had borrowed the money, using his family home as security, to invest in the failed business ran by Karl Suleman.

The NSW Court of Appeal decision – handed down yesterday – highlights the risks faced by a lender who fails to properly assess a borrower’s capacity to repay the loan, and nevertheless proceeds with the loan and takes security.

The Loan Application

In late 2000, Mr & Mrs Khoshaba decided to borrow money to invest in Karl Suleman Enterprises (KSE).

The Khoshabas, with the assistance of their broker, completed a loan application form.

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