A man and woman who sold a disused seaside hotel for £4 million failed last week in a Belfast High Court challenge over the balance still owed.
A judge ruled that £1million due to William and Linda McClure cannot take priority over the buyer’s debts to the bank who funded the deal.
Mr Justice Deeny said he was “entirely satisfied” that the plaintiffs “waived and abandoned any equitable vendor’s lien in respect of that sum of money which they then had and substituted for it this charge which is second in priority to that of the Ulster Bank Ltd.
In February 2007 the McClures agreed to sell the former Montague Arms Hotel in Portstewart to CRF Developments Ltd.
Commerical premises and apartments were to be built at the site on the town’s promenade.
Negotiations had been carried out with Colin Richard Fletcher.
He was later disqualified from acting as a company director due to the running of the firm, the court heard.
CRF Developments went into administration after the deal was agreed.
Under the terms of the sale £3million was to be paid on completion, with the rest due no later than the end of 2008.
However, the balance was not paid to the McClures.
By the time administrators were called in CRF Developments had estimated debts in excess of £12million, most of which was due to the Ulster Bank. In proceedings brought against the company, the McClures wanted a determination that they had a lien, or a right, over the property itself for the unpaid balance.
They also sought a declaration that terms agreed in the sale remained binding, including a prohibition on demolition of the former hotel until the £1million is paid by the purchaser.
But Mr Justice Deeny identified a deed which gave the Ulster Bank priority for its mortgage loan to CRF Developments.
With no reference to the demolition condition, the bank had also declined to cap its priority at £3million.
“Due to the bank’s lending the plaintiffs achieved a substantial sum for their property, albeit not all they hoped or had contracted for,” the judge said.