The emotional cost of bad property transactions

Developers, please remember there is an emotional cost as well as a financial cost to bad property transactions.

I sat down recently for coffee with a developer, and it struck me that, in addition to the financial cost, there is a high emotional cost to a badly run property transaction. In this case the developer was undertaking a development loan to finance a development which he was planning to start on the day the initial loan was drawn. The developer was juggling getting the site geared up to start and negotiating the loan. Having agreed the terms of the loan his main role should have been organising the start on site, making sure that once the land loan was ready to draw, he could start on site immediately and ensure that interest on the loan was not being paid for any idle period on site.

It was the first loan that this developer had done with this lender. Overall, a development loan should be the same with any lender, but we do know that each lender will have their own funding and credit procedures and knowing how this works can be a real advantage in a transaction. In this case the developer’s solicitor had not worked with this lender and it became clear they did not fully understand the funding process. A knowledge gap of this kind can be very unsettling for a client as there is a feeling of loss of control and of not knowing what should come next. This can lead to real anxiety and worry on the client’s part. It is not a good feeling and can lead to sleepless nights. Delays are another source of anxiety. When we are under pressure, our brains become stressed and very often our decision making is either slowed up or just does not happen when it should. After all there are only so many things we can worry about at one time. In this case the developer became very stressed second guessing what was happening in the transaction, and consequently was not able to execute his own role in the transaction as well as he usually does. The loan was delivered late, but even worse, because of the uncertainties caused by the solicitor, the developer was not ready to start on site on drawdown and had to pay interest on the loan without the benefit of being on site. This was a disaster; it was financially costly and emotionally draining.

This could have been avoided with the right guidance on the loan transaction, which would have then left the developer free to concentrate on what he does best, development. Here at Newmanor Law we understand how transactions work and what we need to do to get the best journey for our clients. It is only when you experience good service you will understand just what you are missing and what a difference it can make to your transactional and emotional well-being.