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My Response To Maria Davies

By Andy Shaw | January 26, 2010

Originally posted 20th November 2009

Hi All,

During a discussion with my business partners the other night and following the increase of attacks being made on Passive Investments and finally the number of links to a site being placed in the forums, I have decided that it was time that I actually started to answer our critics back on some individual Passive Investments remarks that have and are being dished out.

Up until now it has always been our policy to ignore such criticisms and let the aggrieved person take us to court if they felt they had a case. As such we have only ever received threats of legal action from disgruntled clients but have never yet had anyone take anything further.

What’s more it is my belief that by talking about this sort of thing whether I be in the right or wrong merely fanned the flames and usually this sort of inaccurate representation just goes away and dies. However, the criticism I am responding to below has been going on for quite some time now.

In this post I am going to address one complaint in particular that has been widely broadcast on the internet and specifically on the individual’s personal website. The complaint came from a Passive customer, Maria Davies, who was at one time a presenter for Passive as well. She has persistently accused and insinuated that Passive Investments were wholly to blame for a CCJ that she still has on a property that was purchased for her by them.

She has been extremely vocal about how she has been wronged and yet at no point, to my knowledge, has she taken any legal action against Passive. Passive have had to tell her to remove libellous comments on previous occasions with the threat of legal action, to which she complied. So here for the first time is the other side of the story. I apologise for the length of the story but thought you should hear it all and then you can make up your own minds.

When We First Worked Together & How And Why She Became A Passive Client

I first came to know Maria through a very odd sequence of events which is too long and  inconsequential to go into, but needless to say a mutual friend introduced her to me. Maria is a professional presenter and really is excellent at what she does. She has an ability to present anything to people and for that I have great respect for her.

During 2005 we were looking for someone to present Passive Investment’s offer and invited Maria to come and see the presentation for herself. She was so impressed and said not only did she want to present the offer for us but she also wanted to become a Passive client, saying that we were able to achieve in property investing what she had up to this stage not been able to, which was indeed a very nice compliment.

I said at the time that I did not invite her there to sell to her but she appreciated what we were selling and wanted to become a client. So we agreed a special deal whereby her commissions on any sales would be offset against the fee and I think in the end she ended up actually paying £18k, or thereabouts, to become a Passive client.

Her First Passive Property

We never had a policy of separating out particular properties for people because they were ‘better’ than other properties. It was felt at the start that this would be unfair and that if we did that it could damage Passive, so it was merely done on a list basis and when you got to the top of the list, the next property that came along was offered to you.

As it happened we found two flats in one block that could literally make a fortune on the cash-out side from the first remortgage. These two properties actually went on to become the two best cash-out deals we have ever found and were actually so good that we felt we could never use them in the marketing material as who would believe them, and it would give people false expectations of what could be reasonably expected.

So instead we always said our average cash-out was just shy of £7k, which of course it was, on average. Well, the cash-out from these two properties was going to be in the region of £35k after all costs, effectively repaying the entire fees of the whole service on the first acquisition. One of these properties was offered to and taken by a Passive client on the list and the second one was offered to and taken by Maria Davies.

When the acquisition was done and the property refurbished the mortgage product which we were intending to use shortly after refurb was no longer available. There was a suitable product from another lender but we would need to wait six months. Due to this we told Maria that she would have to wait for six months to release all of the capital we had originally predicted. Reluctantly, she agreed to wait.

An Problem Outside Of Passive

At this time Maria was moving home and wanted to do a purchase and remortgage so that she did not have to leave much, if any, of a deposit in her new home. She was having trouble getting the valuation to work and as she was a friend and our speaker, I offered our assistance to help ‘make this happen’. My exact words to the person I sent to ensure she got what she wanted was, ‘Do not leave this alone until you have got the val she is looking for.’

That person then went and arranged it for her (all for no cost, of course) and we achieved the valuation she needed so that she could afford to buy the property. At this time we were the best thing since sliced bread.

Now that this purchase was happening Maria was looking for funds to get the deposit together, as from memory this was not going to be possible to do with a daylight bridging loan as the money was going to be tied up for 3 to 6 months. Maria emailed me several times regarding the equity in her Passive property and each time I said I could go to another lender but that she would not be able to get all of the cash out that we originally predicted. Of course she opted to wait as she wanted the larger payout and if we took the smaller one now then she would be trapped for three years before being able to release it again.

Time To Release The Equity From The First Property

The time came for us to refinance. Now the following figures are from memory so they may not be 100% accurate. We purchased the property for £84,950 and needed approx £12k to carry out the refurbishment. The deposit was 15%, so £13k and other costs were £3k (estimate). So cash in was approx £28k. The predicted remortgage was around £140 to £150k and the expected cash out if a full val was achieved would have been approx £35k.

We carried out the first valuation as soon as we could and achieved either £5 or £10k less than we expected on the valuation, so the cash out was going to be reduced to £27k. I contacted Maria myself and said that usually we would go for a second valuation as we felt this surveyor’s opinion was wrong, but given that the timing of her needing the money was so tight, I’d offer her the chance to accept this valuation. She agreed that it was better for her to accept this now.

One Of The Most Successful Investments Passive Ever Made

What I should mention at this point is that Passive’s contract allows us to take any money we see fit to pay our property fee over and above the money needed to repay the client their original funds back. Despite many occasions when Passive has delivered cash out of well over £15k, it never asked for any of this money. As frankly we wanted to impress our clients with what we could do. Well the remortgage went through and Maria was paid out her full deposit and costs, plus all of her bonus cash out (approximately a £28k profit).

We No Longer Needed Maria’s Help Presenting For Passive

At some point in this timeline Greg had decided that he thought he would be better at presenting Passive’s services than Maria or anyone else for that matter. I was not sure but after watching him present one it was clear that he was perfect at presenting these seminars. There was no animosity here that I can think of and our business relationship with Maria presenting for us came to an end.

Passive Allows Her Account To Go Overdrawn

At some point there was a time where Passive allowed her bank account to go overdrawn and when this happened it showed a weakness in our systems so we compensated her for costs and changed our system to increase the cash flow that sat in our clients bank accounts.

The same thing happened to other clients a couple of other times and it led us to increase the balance on all client accounts to cover this. Our only defence against these mistakes was that we were building an entirely new system and discovering the weaknesses in our practices as we went along.

Then There Was The CCJ

Then we got a very distressed email from Maria saying that she had received a CCJ against her property and that she was naturally distraught about this as it would affect her credit file. She wanted to come and see us straight away with a mutual friend to attend and mediate for her. Of course we agreed and she came to see us. At the meeting she told us that she wanted out of her contract, wanted her money back and wanted us to take the property off her hands. She wanted this done immediately as every day whilst this CCJ was in place, there was a chance that the freeholder would find her and have it put on her own record. We said that first we would have to look into what had happened and how this has occurred as it is obviously a mistake that a CCJ had been put against her.

We checked this and confirmed that at every purchase or remortgage of a buy-to-let property the solicitor sends out a letter to the managing agents and requests for them to confirm in writing that all mail will be sent directly to our offices at Passive. This is standard practice for any competent solicitor when using a buy-to-let mortgage to acquire a property, as it is clear that the purchaser will not be living there.

In the case in question the solicitor had in fact done this and what had happened was that the freeholder had wrongfully sent mail directly to the property instead of to where they were supposed to send it (i.e., Passive’s offices). The tenant probably put this mail in the bin.

With no response from the mortgage holder the freeholder got a CCJ attached to the property. When we discovered all of this we spoke with the freeholder who immediately apologised and said that as soon as the maintenance bill was settled that they would immediately apply to the court to have the CCJ removed.

Our Offer Was Not Good Enough

We then went back to Maria with the good news that this was just a mistake and that all she needed to do was to settle the outstanding maintenance bill (the reason for the CCJ and the standard annual charges for her leasehold property) and then they would remove the CCJ straight away. At this point Maria saw red and said, ‘What? You expect me to pay this after what you have done?’

We were more than a little flummoxed by this as we had done nothing, and this was a standard bill that anyone who owns a leasehold property would get every year. What’s more Maria was an experienced property investor and could obviously see that this was nothing whatsoever to do with Passive.

It was at this point we realised that she was just using this as an excuse to ask for her fee back. We assumed that she had money problems as up until now our track record had shown a massive cash profit for her and a nice lump of equity. We tried to offer help here but she insisted that she had no money worries and that all she wanted was her contract fee back, for us to pay the maintenance costs and for us to take over the property.

All of the above was very unreasonable to expect but we said we would discuss it and come back to her. We went away and looked at it from all angles and decided that even though we thought she was being very erratic and unreasonable, we would agree to all of her demands as a thank you for the work she had previously done for us. We thought that this was far more than fair and reasonable, but respected the work she had done for us.

We then asked Maria to come back in and told her that we were in agreement and showed her what the maths were. This involved us giving her back her non-refundable fee in full, paying the maintenance charge on her property and removing the CCJ, repaying her all of the refurbishment costs, repaying all of her mortgage payments, settling the redemption penalties (which from memory were another £6 – £9k) and either Greg or myself purchasing the property from her and effectively taking over the mortgage. In other words, we would make it as though she had never got involved with us at all and she would still keep her speaker fees.

I still look back on this now and cannot believe we agreed to offer all of that as it was frankly more than anybody would ever have offered especially as the only thing that we ever actually did wrong, other than to make her one of the best profits Passive ever made for any client, was to let her bank account go overdrawn. Her advisor obviously advised her to accept the deal.

At this point Maria looked at the maths and asked why she was giving us some money back. I said that was from the profit that the property had made for her and that we were returning all this at zero cost for her. At which point she said to us that she wanted to keep that profit as well!

Stunned, we really did not know what to say and concluded very quickly that we would retract the offer we had just made; it was clear to us that this was not in any way someone we could reason with. They left, Maria very unhappy and threatening court action. After this point her advisor asked us to deal directly with Maria.

Let’s Let The Court Decide

I think we met to discuss once or twice more and Greg then handled it with Maria via email. Our basic stance was – we feel you are unreasonable, please take us to court and we will let them decide.

There was never any court action taken and she then proceeded to go on a public campaign about this CCJ that ‘Passive’ had got for her. At first we did nothing at all because we felt why draw attention to it? Then, as things got more libellous, we asked her to remove her blog posts or we would have to take legal action. From memory I think they were removed.

We again requested for her to stop libelling us and get us into court otherwise we may take action against her. I know that Passive told Singing Pig that the accusations were false and should be removed, which they immediately were, although I didn’t know had been removed until I had a conversation with Greg last week. Apparently it is under new management now and posts will not be removed until legal action is taken.

She stopped for a while and removed her blog posts. Our assumption has been that this bad publicity must be good for her in some way but we do not logically understand how this can be of any benefit for her to pursue and can only think that this is an emotional response.

This person, who I once called a friend, has done all she can to try and damage our reputations. We really do not know for what other reason than malice as she has never even attempted to issue against us, let alone take us to court. We know that she never had a case, and we offered to return her costs to zero out of respect for her which is of course all documented. I fail to see how or why she has carried on this fruitless vendetta other than to bolster her own credibility somehow? All she has finally managed to do is force me to tell the full story which will not be good for her credibility as an investor or as an advisor.

The Bad Investor

One thing I learned a long, long time ago in business was when you are offered a deal that is far better than your case deserves, you rip the hand off of the person offering it. As a property investor you know instantly when the deal of a lifetime is there and from an investor’s point of view to be able to get out of a deal you no longer like for zero total cost and no further loss of money or reputation, is a deal that simply never comes along! If one did venture your way then even a blind investor could see it.

Please bear in mind, that she had put £18k in, within 1 year had £27k out, £20k of equity and now 4 free properties waiting to be bought. It does then raise the question, was this a bad investment? She in my opinion let her emotions get in the way of her mathematical judgement.

I do not know why she still hasn’t removed the CCJ from her property, as according to her that was her primary motivation, yet we clearly explained to her on several occasions that this was due, yet still it remains unsettled.

As I said, I never intended to tell this story, however, following the full ramifications of what has happened to us, my business partners have asked me to defend this and other cases if they are defendable, whilst holding my hands up to those that aren’t.

So hopefully the other side of this situation gives you more of a chance to make up your own mind. We have always felt that her attacks have been very unfair and hopefully I have now fully explained our side. As far as I am concerned I hold no ill will towards Maria and if she wanted to talk then I would be happy to do so. I simply do not understand her motives.

I hope this in some way goes to prove that not all that is written about Passive is true.

Best wishes

Andy


The views expressed in this article are those of Andy Shaw only

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For an online pdf copy of this article please Click Here

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