Sell My House UK

If you are facing the possibility of repossession, have a look at this guide to the process. We hope you find it helpful.

Background

Repossession is normally taken by a Building Society who hold the first charge. It can however also be taken by second chargees (further advances and loans e.g. secured finance), and also if someone has a Charging Order secured following a County Court Judgment. The latter is extremely rare.

The Building Society is entitled to seek repossession action if the loan is 2 or more months in arrears. Typically however, this becomes a trigger point for referral to their internal Debt Recovery Department, and they will ordinarily write to and liaise with the Borrower in an attempt to determine the cause of the problem and to arrange for the arrears to be cleared without resorting to court action.

Stage 1: Day 0: Issue Of Possession Proceedings

6 months is commonly the trigger point in terms of the amount of arrears which results in Lenders issuing court action. This is by way of a County Court Summons, issued in the court local to the Borrower. On filing a request for issue, the matter will ordinarily be listed for a hearing date 4-6 weeks hence, dependant upon the court's hearings backlog.

Stage 2: Week 4-6: Possession Court Hearing

At the hearing, the Borrower should attend. If they do not, the claim for possession by the Mortgagee would be deemed to be unopposed, and an Order for Possession will be made 28 days from the date of the possession hearing.

Stage 3: Weeks 8-10+: Order For Possession On A Given Date

If the Borrower can demonstrate their ability to meet the current monthly instalment, and to pay a contribution towards the arrears, the court will in almost every instance at the first hearing, make a suspended possession order. That is they will grant possession to the Building Society, but this cannot be enforced by eviction so long as the Borrower meets the monthly payments, and the arrears contribution as agreed.

A common failing of Borrowers is to make a promise to repay the arrears back as quickly as possible in the hope of securing favour with the court. This leaves them committing to an unmanageable Repayment Order which they invariably default upon shortly afterwards.

It is widely accepted by the court following the case of Cheltenham and Gloucester vs Norgan that Borrowers only need to demonstrate that they can pay the current monthly mortgage payment, and their contribution towards the arrears such that the arrears will be paid over the remaining mortgage term. Thus a person with £2,400 arrears with 20 years remaining on the mortgage (240 months) only has to agree to pay the current instalment, and £10 more to have the Order suspended. This is much more manageable, and less likely to result in further default.

Stage 4: Weeks 10-13+: Issue Of Possession Warrant (Eviction)

If either an Order of Possession is made, or a Suspended Order which is later defaulted upon by the Borrower, the Building Society will submit an application to the court without a hearing for the Bailiff to attend and forcibly evict (Possession Warrant). NOTE: The date in the order for possession is not the date that the borrower has to leave. If they remain, the lender has to issue the Possession Warrant. Usually this process takes 2-3 weeks, dependent upon the court's backlog and Bailiff's work load. This is the key and most pressing deadline date for any repossession action.

If a deal is agreed with a Vendor, even with a Bailiff's eviction looming, it is possible to apply to the court to have the Possession Warrant suspended. The Court fee is currently £30, and the application is submitted to the local County Court.

Solutions To Avoid Repossession

The Possession Warrant can be suspended in two ways:-

1. Payment of the arrears, and maintaining ongoing mortgage payments. If the arrears are cleared, the court will no longer see any reason to proceed with the possession action, and will allow the Borrower to remain. Payment of the arrears can be achieved by paying an Option Fee. Ensuring ongoing payments are maintained, can be achieved by arranging direct payments upon obtaining a mandate from the Building Society. Any Option should be carefully checked by your own Solicitor in advance, and registered on the property. Given that the Option may have to be exercised, it is also advisable that the usual Local Authority Searches and Surveys are undertaken to ensure that you can proceed with the purchase if required.
2. Straight purchase with or without rent back, and with or without an Option to buy back. Here you need firm evidence to put before the court that the deal has been agreed and that this is from a proceedable buyer. The application to the court should include a letter confirming the offer to purchase the property, a letter from the vendor solicitors confirming that they have instructions to sell, and a letter from the purchaser's solicitors confirming their instructions to act in that purchase. It is further advisable for the Vendor to make the most recent monthly payment prior to the application to the court, and agree to make any further monthly payments that fall due until the sale completes.

General Comment

Ultimately whether possession will be suspended is a matter for the District Judge, and they have absolute discretion based upon consideration of all the facts. If the Borrower has had several suspended Possession Warrants, and several offers to purchase which have turned out to be false dawns, you may come across some difficulties. However, the guidance given to District Judges is that where there is an imminent and proceedable deal, they should look to allow a short adjournment to facilitate the sale as being in the best interests of all the parties. From the Lender's point of view, they get their mortgage discharged quickly and without the additional cost and work of repossessing, and from the Vendor's point of view, they theoretically achieve a better deal.

In these type of situations it is important to gather as much information as possible about the Borrower's position, and the questionnaire provided should be utilised. It is also vital to move swiftly and seek legal advise without delay.

The lawyers involvement will be to ascertain the present position, liaise with the Vendor and Building Society if necessary, and then advise on and assist in making an application to the court to suspend. It will also include liaising with any local agency solicitors to attend at the hearing and reporting back. The Solicitor can then deal with the sale on behalf of the Vendor, ensuring that any deadlines imposed by the court to allow for the sale to proceed are monitored and met.

In these situations, time is of the essence. It requires swift action, and a lawyer who can act accordingly.

If you think you have reached a point where you need to sell your home to avoid repossession, please complete the enquiry form or call 0845 055 8421 for private chat about your situation and see if we can help you. Remember, you can stay in your home and rent it back if you like. That way your neighbours never need to find out, and you retain your privacy and your home.