We have previously discussed the problems experienced by tenants when a mortgagee seeks to repossess the property to exercise its power of sale. In a recent alteration to the Civil Procedure Rules some of the issues were addressed by forcing mortgagees to give more notice to occupiers of properties. We reported on this here.
However, providing more notice does nothing to protect tenants whose landlord has not bothered to seek the consent of their mortgagee to the letting. Where the landlord has sought consent the mortgagee is obliged to see out the term of the letting. Non-authorised tenants are not so protected and get short shrift from mortgagees and the Courts. Of course, tenants should always insist on seeing consent to their letting from the mortgagee but this will not help those who find themselves under threat of eviction today.
The government has now produced a consultation on further changes to the process of mortgage eviction in order to help protect unauthorised tenants.
Apparently the government are working with lenders to remind them that they are obliged to see out tenancies which they have consented to and to encourage them to accept unauthorised tenants where possible. We have not seen a great deal of evidence that this engagement is actually working with the worst offenders being Northern Rock and other lenders taken into government control!
The other intended improvement is to make notification to tenants of problems more effective by requiring the letter that is currently addressed to “The Occupiers’ to make specific mention of tenants on its face. This is to come into force in October 2009.
Turning back to unauthorised tenants the consultation intends to achieve a balance between reasonable notice to the tenant and the right of the mortgagee to sell the property with vacant possession. The aim is to allow the tenant two months notice to vacate.
There are a series of different proposals for how this might be achieved ranging from no change through to radical legislative amendment.
There are some real problems with this consultation. For on the government appears to have absolutely no idea how many tenants are affected. They estimate that there are approximately 360,000 properties with unauthorised tenancies but this figure is plus or minus 120,000 which shows the level of uncertainty.
In fact, it is not clear precisely how the government will deal with the situation as a change to assist unauthorised tenants would, in practice, have to be applied in all circumstances where mortgage possession is considered, adding considerably to the cost of mortgage repossession for lenders at a time when they can ill-afford it.
Probably the most practical option is to imporve notification and allow the tenants to attend Court to seek a stay of possession before the judge. Obviously this has the same disadvantage as the current system in that many tenants do not have the knowledge or the desire to attend a Court hearing. Therefore any change is going to have to make the process as painless as possible for those who are, after all, innocent parties. The best option is probably a form sent to the tenant by the lender which permits them to make written representation to the Court.
The consultation is open for responses until 14 October 2009.
Filed under: Uncategorized, consultations, mortgages
22 July, 2011 • 09:53 0
Mortgage Arrears
The arrears on Jayashankar’s mortgage account were in the region of £14,000 and so Lloyds TSB obtained possession.
Jayashankar applied to suspend the warrant for possession but the application was refused because the court was not satisfied that Jayashankar had the financial means to pay the arrears.
The question for the appeal court was whether they had any jurisdiction to entertain an appeal from a refusal to stay a warrant once the warrant has been executed, that is once Lloyds TSB has obtained possession.
Section 36 of the Administration of Justice Act 1970 states:
“36: Additional Powers of the Court in action by mortgagee for possession of a dwelling house
(1) Where the mortgagee under a mortgage of land which consists of or includes a dwelling house brings an action in which he claims possession of the mortgaged property, not being an action for foreclosure in which a claim for possession of the mortgaged property is also made, the court may exercise any of the powers conferred on it by subsection (2) below if it appears to the court that in the event of its exercising the power the mortgagor is likely to be able within a reasonable period to pay any sums due under the mortgage or to remedy a default consisting of a breach of any other obligation arising under or by virtue of the mortgage.
(2) The court –
(a) may adjourn the proceedings, or
(b) on giving judgment or making an order for delivery of possession of the mortgaged property. or at any time before the execution of such judgment or order (my emphasis), may –
(i) stay or suspend execution of the judgment or order
(ii) postpone the date for delivery of possession’
for such period or periods as the court thinks reasonable.
Therefore the courts power under the above section to adjourn mortgage possession proceedings, stay or suspend execution or postpone the date for delivery of possession, comes to an end once a warrant has been executed.
However counsel for Jayashankar stated that CPR 52 allows a judge to suspend the warrant under section 36 on the basis that at the hearing of the appeal from the District Judge the Circuit Judge could exercise all the powers of the lower court and could make any order that the District Judge could have made, that is to suspend the warrant. However, the court was not persuaded and insisted that legal certainty should prevail. Permission to appeal was granted but Jayashankar’s appeal was dismissed.
It is possible that the court may have reached a different decision if the warrant had not been executed but until then, this is the binding precedent.
Filed under: England & Wales, FLW Article, comment, legislation, mortgages