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The possession case

This content applies to England & Wales

The steps the lender will take to bring possession action, and the options available to the judge. The information on this page applies both to loans covered by the Administration of Justice Act 1970 and those covered by the Consumer Credit Act 1974 except where one or other statute is specified.

For how to tell which statute a loan is regulated under, see Legal background.

In general, the Consumer Credit Act 1974 imposes more requirements on a lender seeking possession - for the details, see the page Second charge loans.

Procedure

The lender must use the procedure contained in Part 55 of the Civil Procedure Rules. This requires that the claim is brought in the county court, unless there are complicated disputes of fact or points of law of general importance, or the claim is against trespassers and there is a substantial risk of public disturbance or of serious and immediate harm to persons or property, in which case it may be brought in the High Court.[1]

The procedure is as follows:

  • a claim form N5 will be issued by the county court advising the borrower of the place, date and time of the possession hearing. The summons will be accompanied by a particulars of claim form N120 detailing, among other things, the size of the loan, the arrears outstanding, the mortgage balance details of all payments required and their nature (eg interest and insurance), and any information the lender has about the borrower's circumstances, in particular, details of welfare benefits being paid.[2] If this information is not provided, it could be argued in court that the judge should adjourn the proceedings until the information is provided
  • a mortgage arrears possession claim may be started online,[3] as long as certain conditions are met,[4] using the possession claims online service (PCOL). Where a possession claim is made online, the claimant need not include a full history of the arrears (as detailed above) in the possession claim, as long as s/he has provided the borrower with the full information, and does so again within seven days of the claim being issued. [5] See the page on Online claims for more information
  • the borrower is not required to file an acknowledgment of service or defence, but her/his failure to do so may be taken into account when liability for costs is considered.[6] Where the possession claim has been started using PCOL, a defence or counterclaim may be filed using the service (a username and password will be issued to the borrower with the claim form)[7]
  • witness statements (if any) should be filed and served at least two days before the hearing[8]
  • the possession hearing takes place not less than 28 days and not more than eight weeks after issue, usually before a district judge.

At the hearing, the court will check if the parties have complied with the Pre-action Protocol for Possession Claims based on Mortgage Arrears (see the page on Pre-action Protocol for Possession Claims based on Mortgage Arrears for more information) and the Civil Procedure Rules and may determine the claim or may make case management directions, which may include allocation to a track (see the page on Allocating a case to a track).

Notices

Within five days of receiving notification of the hearing date from the court, the lender must send a notice stating that a possession claim has been started to:

  • the property addressed ‘the tenant or the occupier’,and
  • the housing department of the local authority within which the property is located.[9]

The lender must produce a copy of the above notices and evidence that they have been sent at the hearing.[10]

The lender is also required to give notice to a person who has registered their interest in the property under the Matrimonial Homes Acts 1967 or 1983 or the Family Law Act 1996.[11]

Court’s options

The options available to the court can be summarised as follows:

  • dismissal, where the arrears have been paid or for serious procedural errors
  • a procedural adjournment, where, for example, the lender has failed to provide all required information or give notice to occupiers, or where the borrower needs time to obtain legal advice
  • an adjournment under the Administration of Justice Acts (see the page on Legal background for details) for the borrower to pay the arrears over a reasonable period[12]
  • case management directions where the borrower has produced a substantive defence, for example undue influence (see the page on Possible defences for details). A defence may be established by someone who is not a borrower but who has an interest in the property that is effective against the lender: it may be necessary for the judge to add any such person as a party to the action. This will not usually include tenants unless the tenancy is binding on the lender (see the page on Tenancies binding on the lender for details)
  • a possession order, which may be outright or suspended on terms. The terms may, for example, require payment of the arrears by instalments or the sale of the property by the borrower within a certain time period. Even when making an outright order, the judge may stay enforcement under the Administration of Justice Acts (see the page on Legal background)
  • a time order, if the loan is a regulated contract mortgage (RMC) regulated by the Consumer Credit Act 1974, through which repayment of the loan can be rescheduled (see the page on Time orders for details).
  • a money judgment. The lender may not want this when a possession order has been made, preferring simply to take what is due from the proceeds of sale, but it may be appropriate where, for example, the arrears have been reduced to a relatively small amount, or where the amount of the arrears has been disputed
  • if the property is tenanted rather than 'owner-occupied' then the court may, on the application of an ‘unauthorised’ tenant (ie where the tenancy is not binding on the lender), postpone the date for delivery of possession for up to two months.[13] See the Tenants of mortgagors pages for further details.

A mortgage possession case may return to court for a further hearing or hearings, for example to resolve procedural difficulties, or where the borrower has failed to keep to the terms of an adjournment, suspension or stay.

If possession is given outright or the terms of a suspended possession order are not complied with, the lender can apply to the court, without informing the borrower, for a warrant of possession. The warrant will then be passed to the bailiffs. The bailiffs will inform the borrower, in advance, of the time and date of the eviction and will then visit the property to execute the warrant, unless the borrower has successfully applied to set aside or suspend the warrant.

Law of Property Act procedure

Advisers should be aware of a high court decision in which it was ruled that mortgagees could sell properties without first obtaining a court order for possession, and such an approach was not contrary to Protocol 1, Article 1 of the European Convention on Human Rights. The High Court has held that such action could occur as the power to do so is contained within section 101 of the Law of Property Act 1925, which is implied into every mortgage agreement.[14]

[1] Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55.1.1 - 55.1.4 and 55.1.6.

[2] Civil Procedure Rules SI 1998/3132 (as amended). Practice Direction 55.2.1, 55.2.5, 55.5.1 and 55.5.2.

[3] Rule 55.10A Civil Procedure Rules SI 1998/3132 (as amended).

[4] See Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55b.5.1 - 55b.5.2.

[5] Civil Procedure Rules SI 1998/3132 (as amended). Practice Direction 55b.6.3A - 55b.6.3C.

[6] Rule 55.7 Civil Procedure Rules SI 1998/3132 (as amended).

[7] Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55b.7.1.

[8] Rule 55.8(4) Civil Procedure Rules SI 1998/3132 (as amended).

[9] Rule 55.10(2) Civil Procedure Rules SI 1998/3132 (as amended).

[10] Rule 55.10(4) Civil Procedure Rules SI 1998/3132 (as amended).number 10">[10]

[11] Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55.2.5(1).

[12] s.36(1) Administration of Justice Act 1970.

[13] s.1 Mortgage Repossessions (Protection of Tenants etc) Act 2010 and Civil Procedure Rules, rule 55.10(4A).

[14] Horsham Properties Group Ltd v Clarke and Beech GMAC RFC Ltd (Third Party)[2008] EWHC 2327 (Ch).

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