Following the sale of the property, there is a shortfall. We cannot make a recovery from the borrower, are there are any other routes of recovery?
If you have a shortfall, and your borrower is impecunious, the good news is there is another route of recovery; a professional negligence claim.
If your repossession valuation shows a significant drop in price from the original valuation, it could be that the original valuer negligently overvalued the property and there may be a claim against the valuer. In addition, were there any title issues on sale or issues which the solicitor was under a duty to report to you, but failed to? The original completing solicitors may have acted negligently or in breach of contract and/or breach of duty, and more seriously, in breach of trust. It may be that a broker or accountant has misrepresented information pertaining to the borrower, in which case there may be a claim against them.
We would be delighted to investigate these potential claims on your behalf and assist you to recover the shortfall by pursuing a claim against the negligent professional. Please contact Georgina Squire of Rosling King LLP, who would be pleased to discuss this avenue of recovery with you.
We wish to take possession proceedings but we are advised that there is a tenant in the property, how can we proceed?
A lender must establish whether the tenancy in question is an “authorised tenancy” or an “unauthorised tenancy”.
If it is an “unauthorised tenancy”, the tenancy is not strictly binding on the lender. The lender can therefore go ahead with bringing possession proceedings. However, the tenant could apply to the Court under the Mortgage Repossessions (Protection of Tenants etc.) Act 2010 to postpone the date for delivery of possession for a period not exceeding two months. If the Court makes an order postponing the date for delivery of possession, it can be made conditional upon the tenant making payments to the lender during the period of postponement.
Alternatively, if the tenancy is an “authorised tenancy”, a lender could do one of the following:
(a) Take possession of the property subject to the tenancy, collect the rent and serve a Section 21 Notice to bring the tenancy to an end at the end of the fixed term of the tenancy.
(b) Appoint an LPA receiver to manage the property, collect the rent and serve the relevant Section 21 Notice bringing the tenancy to an end, then sell the property with vacant possession; or
(c) Under the terms of the particular mortgage deed, it may be possible for the lender to collect rent itself directly from the tenant and to serve the relevant Section 21 notice under the tenancy.
In summary, it is clear that when there is a tenant in the security property, there are practical ways in which the tenancy can be dealt with to enable a lender to take possession.
We would be delighted to assist you with repossessions. For further information, please contact Georgina Squire of Rosling King LLP.
We wish to pursue our borrower for the shortfall but we cannot find them, what can we do?
In circumstances where a borrower does not provide contact details to a lender following the repossession of their property, the lender will have to initiate an investigation to discover the borrower’s whereabouts.
The investigation can be undertaken by the lender themselves, however there are many professionals who offer services in this field and who are specialists in locating borrowers. There are clear benefits to instructing such professionals as they have the relevant experience to carry out the work, access the necessary resources and can be more cost effective than a lender undertaking the investigations themselves.
An additional benefit of instructing a professional investigator is that they may be able to identify further information about the borrower, other than simply their current location. This information will be pertinent to a lender’s decision as to whether to pursue the borrower through (what can be costly) litigation. The additional information can include:
The assets which the borrower may hold;
Whether the borrower is employed;
Whether the borrower is bankrupt or subject to an IVA; and
What other debts, such as County Court Judgments, the borrower may have.
The information obtained will effect both the practical and commercial decisions that have to be made when considering whether to pursue a borrower.
We would be delighted to assist you recover the shortfall on an account from the borrower. Please contact Ann Ebberson of Rosling King LLP to discuss this avenue of recovery.
Have you taken possession of a property? Are you attempting to sell it but have noticed there is a prior “Housing Act” Charge? What should you do?
Why is there a “Housing Act” charge?
The Housing Act 1985 (subsequently amended by the Housing Act 2004) (“Housing Act”) enables tenants to purchase their homes from the Council at a discounted rate. To prevent immediate re-sales only benefitting owners, the Housing Act provides for repayment of any discount on an early disposal and a right of pre-emption in favour of the Council.
Is the Discount still repayable and does the pre-emption period still apply?
This depends on the length of the repayment period. You should obtain a copy of the Transfer or Lease referred to in the Official Copies of the Register which will refer to the exact time period. The pre-emption period in favour of the Council is usually substantially longer than the discount period so even if there is no discount repayable you may still be subject to the pre-emption requirements.
What if the sale falls within the repayment period?
Contact the Council for confirmation of the amount repayable. If you were an “approved lending institution” (i.e. an authorised mortgage lender) at the time and loaned the original advance to the borrower to enable the property to be purchased from the Council, your loan (save for subsequent advances) should take priority over the Council’s discount. Beware not to overpay!
For further information or advice on the above or any other Property related queries, please do not hesitate to contact Ann Ebberson of Rosling King LLP.