A bank sells a debt to a non-bank: what are the consequences?

It happens that banks sell their loans on customers to another party. This may be a bank, or it may be a non-bank. Banks have duties of care for their customers by contract and by law. When a loan is sold, do those duties of care pass with it to a non-bank? That was the question recently answered by the Supreme Court.[1]

What was going on?

Van Lanschot Bankiers (the bank) provided a commercial real estate loan to a company. As security for the loan, the bank obtained a mortgage lien on the property to be purchased. Many years later, the bank sold its claim against the customer to a non-bank. The non-bank increased the interest rate. The customer continued to pay only the old interest rate. The non-bank therefore cancelled the financing and requested repayment of the entire amount lent.

The real estate client disagreed. The customer claimed in court that the bank's rights did not pass to the non-bank. The company has a highly personal relationship with the bank and the bank's claim is special in nature, the customer argued. Therefore, the debt to the bank should not be sold to a non-bank.

Loan receivable may be sold to a nonbank

The court asked the Supreme Court to rule on whether the special relationship between bank and customer means that the money loan may not be sold to a non-bank. A right of action, such as that arising from a money loan, can in principle be sold unless the law or the nature of the right precludes it. The law does not oppose the assignment of a money loan, but possibly the nature of the claim does. In a money loan, the essential performance of the customer consists of repaying the amount borrowed with interest. This performance, according to the Supreme Court, is not special enough that a creditor's powers can only be exercised by a bank. Or put another way, the nature of a debt to a bank under a money loan does not preclude its sale to a non-bank.

Duty of care from bank on sale transferred to non-bank?

The question the Supreme Court also had to answer was whether the bank's duties of care pass with it to the nonbank. The answer to that is, in principle, no, but with a nuance. The bank's duties of care under the law and the agreement are not part of the bank's claim against the customer to repay the loan amount. Therefore, these duties of care do not accrue to the non-bank as such. However, a specific duty of care may limit the content of the claim (read: debt to the bank) itself. For example, if the bank and the real estate customer have agreed that the interest may only be increased up to a certain maximum, then this particular duty of care does pass to the non-bank because this is part of the claim itself.

Besides the substance of the claim, after the sale of the claim, the customer and the nonbank are in such a relationship with each other that this legal relationship is governed by reasonableness and fairness, the Supreme Court further considered. What that means depends on all the facts and circumstances of the specific case.

Should your bank sell your loan or credit to a nonbank, it may be advisable to have a specialist look into your rights to and obligations to the nonbank.

[1] Supreme Court July 10, 2020, ECLI:NL:HR:2020:1274.