In property finance, borrowers facing default often race to secure alternative financing to pay off an aggressive lender. A common misconception is that a firm offer to refinance, or an official communication of readiness to redeem the loan, is enough to halt the accrual of high interest rates.<\/p>\n\n\n\n
The Court of Appeal\u2019s judgment in Houssein and others v London Credit Ltd [2026] EWCA Civ 830<\/a> provides a definitive, modern restatement of the law of tender. The Court clarified that a mere offer to refinance does not constitute a valid tender of payment and will not stop contractual interest from running.<\/p>\n\n\n\n The case arose from a \u00a31.881 million bridging loan facility advanced by London Credit Limited (LCL) to CEK Investments Ltd, a company owned by Mr and Mrs Houssein. The loan carried a standard interest rate of 1% per month. Upon an event of default, the contractual terms triggered a compounded default interest rate of 4% per month (approximately 60% per annum).<\/p>\n\n\n\n Following an alleged breach of a non-occupation covenant, LCL demanded immediate repayment and enforced the default interest rate. As the dispute escalated, the borrowers attempted to secure refinancing through alternative lenders to redeem the debt. They argued that their repeated, formal offers to refinance, which LCL allegedly frustrated or refused, should invoke equity to stop interest from accruing.<\/p>\n\n\n\n The Court of Appeal rejected the borrowers’ arguments, outlining strict parameters for what qualifies as a valid legal tender to stop contractual interest:<\/p>\n\n\n\n The Court ruled that expressing a willingness or intent to redeem is legally insufficient. Because the borrowers’ refinancing proposals were conditional on a new lender releasing funds, which would not happen until LCL released its security, the funds were not “immediately available”.<\/p>\n\n\n\n Senior Litigation Partner David Burns has extensive experience dealing with disputes relating to bridging loans. For enquiries on this topic, please contact David Burns via email d.burns@rfblegal.co.uk<\/a> or direct dial 0207 467 5751.<\/p>\n","protected":false},"author":23,"featured_media":10783,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[62],"tags":[81],"class_list":["post-10767","insight","type-insight","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-litigation","tag-litigation-team-dj"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\tThe Dispute and Background<\/h2>\n\n\n\n
What Constitutes a “Valid Tender”?<\/h2>\n\n\n\n
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Key Takeaways for Borrowers and Lenders<\/h2>\n\n\n\n
Feature<\/strong><\/td> Mere Offer to Refinance<\/strong><\/td> Valid Legal Tender<\/strong><\/td><\/tr> Status of Funds<\/strong><\/td> Conditional<\/td> Unconditionally set aside<\/td><\/tr> Availability<\/strong><\/td> Dependent on simultaneous release of security<\/td> Immediately accessible by the lender<\/td><\/tr> Impact on Interest<\/strong><\/td> Interest continues to accrue at the contractual rate<\/td> Interest stops running if the lender improperly refuses<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n For Borrowers:<\/h3>\n\n\n\n
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For Lenders:<\/h3>\n\n\n\n
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Contact Us \u2013 Senior Litigation Partner David Burns <\/strong> <\/h2>\n\n\n\n