Landlord being repossessed for mortgage arrears – what rights does the tenant have?

by Readers Question

8:25 AM, 21st May 2013
About 7 years ago

Landlord being repossessed for mortgage arrears – what rights does the tenant have?

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Landlord being repossessed for mortgage arrears – what rights does the tenant have?

Landlord being repossessed for mortgage arrears - what rights does the tenant have?I stumbled across one of your articles outlining Squatters rights.  I hoped you might be able to assist me in a current quandary I face.

I am a tenant, I have paid my landlord on time, every month, for the last 5 years.  I have just discovered that he has not been paying his mortgage and my home is very likely to be repossessed in a weeks time.

If this is so, I understand that I could be faced with a 16 day minimum eviction notice. Is this right?

If this is so, I am a single mum with a 7 year old son, I couldn’t possibly organise another property in 16 days. My fear would be “squatting” until I did.  However, would I still be classed as a tenant?  Any light you can shed on this would be truly helpful.

Many thanks,

Melanie



Comments

Mark Alexander

8:41 AM, 21st May 2013
About 7 years ago

Hi Melanie

I’m pretty certain you will not be a squatter and I suspect you have far more right’s that you think.

You certainly have the right to approach your landlords mortgage lender directly to explain your position. This may well be worth doing as they may consider appointing an LPA receiver as a collector of rents and then allow you to stay in the property. It doesn't always make sense for lenders to repossess and sell so please consider this option seriously.

I am uncertain whether a repossession order on your landlord affects your rights as a tenant but logic tells me it shouldn't. If I am right you will be given two months notice before an application for an eviction order against you can be made. This can also take weeks, even months to obtain.

I'm no expert on this area of law Melanie so I've invited people with far more legal experience than me to comment.

I wish you well.

Ben Reeve-Lewis

9:09 AM, 21st May 2013
About 7 years ago

Melanie you need to contact the lender, or preferably the lender's solicitor and tell them that you are in occupation and ask for 2 months grace, citing the Mortgage Repossession (Protection of tenants) Act 2010.

If the mortgage is a standard residential one then the lender must follow this legislation and if they refuse, which I have never heard of, then you can go to court and ask the judge to overule their decision and grant you the extra 2 months.

If it is a buy to let mortgage this law doesnt apply. The lenders will be able to advise you but keep everything in writing with them.

If you do need to go to court you use a form called an N244 available from the court or at HMCS court forms online.

Even if the landlord loses the home, under the Act the lenders will leave you there for 2 months which will give you some time to find somewhere else to live.

Be very careful what your landlord tells you as it is often the case in these instances that landlords tell the tenants that they have it all sorted with the lender when they havent and because you arent their account holder they wont give you information about the borrower's account so always ask for written confirmation if the landlord says he has negotiated a deal.

You also need to bear in mind that if the landlord is losing the property you may find it difficult to recoup your deposit.

And before P118s landlord readers jump on me for demonising them the advice given here is based on situations I have seen everyday since the Act came in and have to untangle it. It happens

Ben Reeve-Lewis

9:18 AM, 21st May 2013
About 7 years ago

I didnt see Mark's post when I did mine. He is right on receivership to Melanie who may well leave you in as a tenant for some time. If the lender is Mortgage Express then they very usually go to receivers. Also commonly their solicitors are dryden Fairfax, or Walker Singleton, which can often provide a clue

Mark Alexander

10:17 AM, 21st May 2013
About 7 years ago

Awesome, thanks Ben 🙂

Tessa Shepperson

10:24 AM, 21st May 2013
About 7 years ago

John Bolland

4:12 AM, 22nd May 2013
About 7 years ago

We came across this some time ago when a tenant in this position was having to move out and wanted to rent one of our desirable properties. Basically he said it came to court in a case bought by the mortgage lender against the borrower. The judge I gather ignored his pleas to stay even though he had paid his rent on time prior to the event, but then withheld it and then offered to pay up in full in court. This cut no ice with the judge but he did get time to find elsewhere to live.

The lesson to tenants is that Mortgage Companies always put their interests first and in such a situation the tenants should look to move asap.

Ben Reeve-Lewis

8:55 AM, 22nd May 2013
About 7 years ago

@Toplets; Yes its not unknown for judges to completely ignore the law, or even be simply unaware of the relevant legislation. It could have been the the Act didnt apply because it was a buy to let mortgage but on the other hand at least the judge granted the tenant time to find somewhere else.

Industry Observer

9:28 AM, 22nd May 2013
About 7 years ago

The whole issue is lenders have tremendous powers to appoint Receivers courtesy of LoP 19235. I used to think they had to be mortgagee in possession first, then choose to appoint but learned last year to my great surprise that they do not and effectively can circumvent the need for a Court Order against the borrower/landlord by appointing a Receiver.

If they do this then any talk about 4 or 5 months to possession frankly goes out of the window as they can use Accelerated Possession.

The lender should definitely have written TO THE OCCUPIER at the property at least a fortnight before even going to Court to get a possession order. My guess is they did as if they have not then Ben’s advice is good vis a vis challenging and delaying the lender. However, that strategy only works if they seek possession – if they appoint a Receiver they short cut it.

A big point no-one has made yet is that this is a clear breach of peaceful occupancy rights and an open and shut case for Melanie to sue. If there is any equity left after sale – which would be by far the best option Melanie rather than a Receiver continuing to collect rent as she could go for a lump sum – Melanie can sue for damages which I would suggest would be considerable.

Ben Reeve-Lewis

9:44 AM, 22nd May 2013
About 7 years ago

Fascinating stuff Industry Observer and I'm sure of great interest to readers here. Like you I wasnt aware that lenders could choose their route.

Can you explain a bit more about the tenant suing the landlord though? This is a very common scenario for me (5 or 6 cases a month) but I had never considered the idea that the tenant could sue for loss of their home through the landlord being repossessed for mortgage arrears.

Are you saying the non payments could be viewed as an 'Action against the tenant'? or have I got hold of the wrong end of the stick? Entirely possible!

Industry Observer

10:51 AM, 22nd May 2013
About 7 years ago

Hi Ben

Wrong end of stick I think!!

I am referring to the same scaenario as if the LL turned up with a few drunk friends and turfed the tenant out unlawfully. Clear breach of peaceful occupancy/quiet enjoyment and damages, aggravated damages and if, as usual, the tenant is a pregnat female, exemplary damages, and £20K to the ex occupier.

This is the same scenario, different cause. The tenant has fulfilled their side of the bargain but the LL has been spending the money on issues other than his mortgage. The tenant is deprived of their home by the lender yes, but it is cause and effect, it is the Landlord that has caused the problem and they have clearly breached their obligatuions in the tenancy agreement.

So as long as you can find the ex Landlord and as long as they have two pennies to rub together then you can sue them - surely?

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