Money judgments in possession proceedings for rented property

Landlords can ask for a court order for money when they apply for possession of a rented property. If the order is granted it is treated as a County Court judgment.

Outright and suspended possession orders normally contain a judgment for the amount of the arrears at the date of the court hearing. The judgment could include an amount for costs, at the discretion of the court.

It is not possible to request a money judgment when using the accelerated procedure for assured shorthold tenancies.[1]

A money judgment could be made up of:

• costs

• arrears

• arrears and costs

The judgment can be enforced in the same way as any County Court judgment. It is not immediately entered on the register of judgments, orders, and fines. That means creditors and landlords cannot see the judgment when they perform credit searches.

The judgment is only registered if the landlord applies to enforce the judgment, for example by a bailiff's warrant to take control of goods, or an attachment of earnings order.

Suspended orders

If the possession order is suspended, the money judgment is suspended on the same terms. If the terms of the suspension are breached, the landlord may apply for an eviction warrant and enforce the money judgment.

Adjourned cases

Proceedings that have been adjourned do not contain a money judgment unless the court orders otherwise. If the matter is decided at a later date the money judgment is likely to be granted if a possession order is made, whether suspended or outright.

Certain judgment debts attract statutory interest at a rate of 8 per cent.[2] Statutory interest is simple interest.

Statutory interest runs from the date the judgment becomes payable unless a rule of court or a practice direction say otherwise. The claimant does not have to specify a claim for statutory interest on the claim form.[3] Statutory interest can only be added to debts over £5000[4] but must not be charged where the:[5]

• judgment debt is payable by instalments set by the court, and

• instalments are up to date

If the money judgment has been suspended on payment terms, statutory interest cannot be charged unless the order is breached and the money judgment becomes enforceable.[6]

If the money judgment is granted, the landlord becomes a judgment creditor, and the person against whom the order is made is the judgment debtor.

A money judgment can be enforced by a:

• warrant of control in the County Court

• writ of control in the High Court[7]

• third party debt order

• charging order

• attachment of earnings order

An unpaid money judgment may also be used as the basis for a creditor bankruptcy petition if the amount of the judgment exceeds a minimum threshold.[8] Before presenting a bankruptcy petition the creditor must have either:[9]

• attempted to enforce the debt by a warrant or writ of control

• issued a statutory demand

Debtors facing creditor bankruptcy proceedings should seek specialist debt advice and may need to speak to a solicitor.

Read more about how a money judgment can be enforced.

Private landlords, providers of credit and insurers will normally carry out a credit check to see whether the applicant has a good record of paying their debts. Information such as electoral role registration and housing status can also be taken into account.

Whether a judgment made in possession proceedings is visible on the judgment debtor’s credit reference file depends on the stage of enforcement.

Effect of judgment on credit reference files

Money judgments made as part of possession proceedings are exempt from registration on the register of judgments, orders and fines.[10] This means they will not show up on a credit reference file. Entry on the register and credit reference files occurs when the creditor takes ‘any step’ to enforce the order.

In this instance, enforcement is limited to the order for the payment of money. This includes all the enforcement methods available in the County Court other than bankruptcy.[11] A warrant of possession is not a step taken to enforce the order.

How to amend a credit reference file

Commercial creditors normally amend a debtor’s credit reference file to show a judgment debt has been satisfied. Smaller judgment creditors such as private landlords may not do this as a matter of course, or there may be a disagreement about whether a debt has been repaid in full.

If the debtor has paid the amount of the judgment debt along with any interest and costs ordered by the court, they may apply for a certificate of satisfaction on form N443. The application should be accompanied with evidence of payment, or an explanation if evidence is not available.[12] The application is sent to the court that issued the judgment.

The court will send a copy of the application to the creditor. The creditor is required to reply within 1 month of receiving the application.[13] If the creditor disputes the debt has been paid the court will set a hearing to determine whether the judgment debt has been paid.

If a certificate of satisfaction has been issued a registered judgment should be marked as satisfied on the register of judgments, orders and fines.[14] The information will be transferred to the debtor’s credit reference file to mark a registered judgment as satisfied.

How to correct information on a credit reference file

A data subject is an individual who can be identified by information that is held about them, for example in a credit reference file. Authorisation is required to view the credit reference file of a data subject. This is usually given by the data subject when they apply for credit, or agree to pre-tenancy checks.

The data subject can complain to their credit reference agency if incorrect information is contained on their credit reference file. If the complaint is not resolved the Information Commissioner’s Office can investigate the matter.

Some data may be correct, but the data subject considers it unfair or misleading. For example, a judgment may show against a person who was jointly liable for rent arrears, but who was not living at the property and did not expect to pay. A data subject can add a notice of correction to their credit reference file to provide an explanation. This should be no longer than 200 words and should be sent to the three credit reference agencies: Experian, Equifax and TransUnion.

The Information Commissioner’s Office website has information about credit reference agencies and data protection.