The Wernhards must have thought it was Christmas because when they sold their investment property, their bank - Citigroup handed over the Title Deeds not only for that investment property but for two other properties as well.
It was Citigroup's mistake to release the Title Deeds to the other two properties because the Wernhards still owed $309,000 to Citigroup.
The Wernhards decided not to tell Citigroup of its mistake and registered the discharges of mortgage they received. They soon sold one of the other properties and pocketed the proceeds of sale, instead of paying down their line of credit for that property with Citigroup.
Four years later, in 2016, Citigroup discovered its mistake. It asked the Wernhards to re-mortgage their remaining property, their home at Watanobbi (near Wyong on the Central Coast). The Wernhards refused. Not long after, they ceased to make repayments on their loan.
On 1 March 2019, the NSW Supreme Court ordered the Wernhards to re-mortgage their home to secure a debt of at least $313,000 plus the legal costs they must pay to Citigroup because they lost the court proceedings which would be in the range of $75,000 to $100,000.
In the light of the penalty interest and the legal costs payable, their decision not to tell Citigroup of its mistake will cost the Wernhards well over $100,000 and is likely to cost them their home.
Should the Wenhards have told their bank of its mistake? It's hard to tell, because after all, they had the benefit of the proceeds of sale of the second property which amounted to $190,000 for several years.
For my case note