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Types of orders

This content applies to England & Wales

Orders the judge can make following a court hearing.

The information on this page applies both to loans covered by the Administration of Justice Act 1970 and loans 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.

Dismissal

If there are no arrears at the time of the court hearing, for example, because the debt is cleared at the last minute, the action will normally be dismissed. This will be the end of the matter for the borrower, apart from the possibility that s/he will have to pay court costs and the lender's legal costs. The mortgage agreement usually states that the borrower pays these costs. In rare cases, the court could be asked to order that the lender's costs should not be added to the security (see section on Costs below).

Adjournment

There are two distinct situations where the judge may adjourn the case:

  • 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 Legal background) for the borrower to pay the arrears over a reasonable period.

The court can adjourn the hearing for however long it thinks the parties need, but commonly, the adjournment will be for 28 days. The court may attach terms to the adjournment, for example, that the current instalments are paid. The court will send out a written notice giving the date and time of the next hearing.

For loans under the Administration of Justice Acts, where it is clear that the court is not going to grant outright possession to the lender, the borrower can ask for an 'adjournment on terms'. This means that the case is adjourned (normally indefinitely) as long as the borrower keeps to the monthly payments specified by the court. This is a preferable alternative to a suspended order for possession. The advantage to the borrower is that if s/he fails to pay, a further court hearing is necessary. When the terms of a suspended order are breached, the lender can apply immediately for a warrant for possession without a further hearing.

Some district judges can be unwilling to adjourn on terms as they feel either that it does not give the borrower enough incentive to pay, or that the extra stage in the proceedings only has the effect of increasing the legal costs that would normally be added to the mortgage debt.

Case management directions

If the borrower (or another person) can show a defence to the mortgage case, then it will usually be appropriate to make case management directions. These will usually include allocation to a track, having regard to the general factors governing allocation [1] and those specific to possession cases:

  • the amount of any arrears of rent or mortgage instalments
  • the importance of vacant possession to the claimant[2]
  • the financial value of the property will not necessarily be the most important factor.[3]

Other directions may include:

  • the service of a full defence, if not already served
  • service of a reply
  • disclosure and inspection
  • witness statements
  • expert evidence, if required (often expert valuation evidence)
  • directions for trial.

The adviser should be prepared to explain any particular reasons why longer periods than usual should be allotted, for example, the time required before service of a defence because of obtaining public funding and/or the involvement of counsel.

Suspended possession order

Where the court is satisfied with the borrower's proposals for payment, a suspended possession order will usually be made. In the case of loans subject to the Administration of Justice Acts, the borrower will need to show that s/he can meet future mortgage payments and clear the arrears within a reasonable period.[4]

The court should consider the starting point for determining a reasonable period as the outstanding term of the mortgage.[5] However, the outcome will often vary depending on the practice of the particular county court in which the case is being heard. There is no equivalent 'reasonable period' requirement for loans regulated by the Consumer Credit Act 1974. 

The order will state how the arrears should be cleared, for example, by equal instalments, steadily increasing instalments, or by a combination of these over an agreed period. If the borrower is able to pay a lump sum towards the arrears, this can be included in the order.

The suspended order will remain valid also if the lender later agrees to consolidate the borrower's arrears with the outstanding balance.[6] Although the effect of the consolidation is to temporarily wipe off the arrears, if the borrower falls into further arrears, s/he will breach the order and the lender will be able to apply for a warrant of execution.

The court can also suspend the possession order for a reasonable period to allow the borrower time to sell the property.[7] However, the court must be satisfied that the proceeds of the sale will be sufficient to discharge the mortgage debt. If the borrower is in negative equity the court can only suspend the order if the borrower has other funds sufficient to meet the shortfall.[8]

The court has the power to extend any period of suspension.[9]

If a suspended possession order is made, the lender is not entitled to evict the borrower unless s/he fails to keep to the terms of the order, but one missed payment is enough to break the terms. If the borrower cannot comply with the terms of the order, s/he can apply to go back to court to have the terms varied (see Court hearings after initial order). The borrower can request that the order states that a possession warrant should not be issued without a further hearing first taking place, but this is at the judge's discretion. The judge is more likely to agree to such a request where the terms of the suspended order are not straightforward, for example if there is a lump sum to be paid in several months' time, or if the payments depend on a pending job offer.

In addition to a suspended possession order, the lender is also entitled to apply for a money judgment. In most cases, the money judgment will be suspended on the same terms as the order for possession[10] under the court's discretionary powers.[11] In cases where a suspended order is also obtained, the money judgment does not appear on the register as a county court judgment unless and until the terms of the suspended order are breached and the lender starts to enforce the order for possession.[12]

Time Orders

Borrowers in difficulties can apply to the court for a 'time order' to reschedule a loan over a longer period. A time order allows the court to reschedule the payments due in order to give the borrower more time to make repayments. A time order is not the same as a suspended possession order, and court has more flexibility in setting terms for repayment. Where a time order is made, the court should suspend any possession order that it also makes, so long as the terms of the time order are complied with.[13] See Time orders for more information.

Order for outright possession

If the borrower does not go to the hearing or if there is no prospect of the arrears being cleared within a reasonable period, the district judge will usually make an order for outright possession. These orders will normally take effect 28 days after the hearing. If there are special reasons, the court may extend this to 56 days, for example where the borrower is ill or a new home is not yet available. At the end of the 28- or 56-day period, the lender can apply to the court for a warrant of possession to be executed by the court bailiffs. The court has the jurisdiction to postpone execution of the warrant for possession for a reasonable period.[14]

If the property is rented out and not occupied by the borrower then the tenant may be able to take action to delay eviction (see Tenants of mortgagors).

Order for sale

The purpose of obtaining possession is so that, after repossession, the lender can evict the borrower and sell with vacant possession. Where a lender will face difficulties obtaining possession because of, for example, reasons related to fraudulent behaviour on the part of a borrower, the lender may apply for an order for sale as an alternative in possession proceedings. 

Costs

It is common practice for a mortgage agreement to contain a clause stating that costs relating to possession action can be added to the outstanding loan. This applies regardless of whether the court order mentions an order for costs, and indeed lenders may request that no such order is made. If the costs are considered unreasonable or improperly incurred,[15] the borrower may be able to have them reduced by applying separately to court for an order to that effect. In one case, the court disallowed the mortgage lender from recovering its costs by adding them to the security, as the possession action had been futile in the first place.[16]

[1] rule 26.8 Civil Procedure Rules SI 1998/3132 (as amended).

[2] rule 55.9 Civil Procedure Rules SI 1998/3132 (as amended).

[3] Civil Procedure Rules SI 1998/3132 (as amended), Practice Direction 55.6.1.

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

[5] Cheltenham and Gloucester Building Society v Norgan [1996] 1 All ER 449, CA.

[6] Zinda v Bank of Scotland Plc [2011] EWCA Civ 706.

[7] Bristol & West Building Socity v Ellis (1997) 29 HLR 282, CA.

[8] Cheltenham and Gloucester Building Society v Krausz (1997) 29 HLR 597, CA.

[9] LBI HF v Stanford & Anor [2015] EWHC 3130 (Ch).

[10] Cheltenham and Gloucester Building Society v Grattidge (1993) 25 HLR 454, CA.

[11] s.71(2) Consumer Credit Act 1974.

[12] Regulation 5B, Register of County Court Judgment Regulations 1985.

[13] Southern and District Finance plc v Barnes (1995) 27 HLR 691, CA. 

[14] s.36 Administration of Justice Act 1970.

[15] Gomba Holdings (UK) Ltd v Minories Finance Ltd (No.2) [1993] Ch.171.

[16] Co-operative Bank v Phillips [2014] EWHC 2862 (Ch).

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