Developers seek legal advice over ‘swap contracts’

Estates Gazette has reported that a number of small property developers, who are facing receivership, are contemplating taking legal action against their banks for allegedly being mis-sold interest rate swap contracts.

The developers claim that they were told that the contracts would act as insurance against potential interest rate rises. They have complained that they were not warned that the contracts were sometimes for a longer term than the loan itself, and that they had very large exit fees.

This situation is an unfortunate repercussion of the recession and it will be interesting to see if any litigation arises.