The lender's duty to obtain a proper price on a sale

The decision in Bell v Long is helpful confirmation that where the security relates to a number of properties, the sale of properties as a portfolio by receivers can be justified.

When the court is assessing whether a lender or receiver has complied with their duty to obtain a proper price, it will depend on the facts and circumstances of each case.

It is therefore best practice that when a lender or a receiver is exercising its power of sale, it sells the mortgaged property at a price recommended by a qualified agent or achieved at a properly advertised auction.

If the mortgaged property is of a specialist nature, the lender or the receiver should take advice from someone with the appropriate expertise and advertise in the relevant trade journals. However, it is not sufficient to leave the sale to be dealt with by an apparently competent agent. If the property is sold for a price less than it should have been due to the agent's negligence, the lender will still have breached its duty to the borrower.

What is certain from previous cases is that a lender and receiver may take comfort that the court has tilted the scales in their favour. A borrower will find it difficult to rebut the presumption that a lender or a receiver has not obtained a proper price so long as they have acted in good faith and taken properly informed decisions.