I was told that a bank can call in a loan on a commercial property at anytime. It came from a story I was told about a fellow who 6 years ago borrowed $800k from one of the 4 big banks for the purchase of a $1 Mill commercial property. It was leased out for long term and all repayments were being fully meet.
Then mid last year he was notified that the bank said they were calling in the whole loan. He couldn't do it, the tenant was thrown out, the fellow lost the property and was then sold off as a $700k firesale. Can this really happen?? Isn't a loan a locked in contract on both parties, for so many years, with certain repayment etc ??
I suppose it's like a margin call on property. I was also told that this was very common practise by the banks during the late 80's/ early 90's recession, during the commercial property bust.