A long story short 4 years ago I had 5 properties and things became tight and I had 1 property repossessed. The property was sold with a mortgage shortfall of £30k. Recently the lender wrote to me informing me of the money still owed. Can the lender seize any or all of the 4 other properties that are all currently in negative equity and whose mortgage is with a different lender? As far as iam aware all the lender can do in this situation is to place a charge on the property for when it is sold, is this right? Also i have been told by a friend that the lender can actually seize all the properties and put them under managment and collect all the rent till the debt is paid, then hand the properties back. I have never heard of anything like this, is this something the lender is able to do at court?
I have an appointment to see someone at CAB, but i would like an experts opinion before hand.
Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.
For the avoidance of doubt from what you say do I understand correctly that you had 1 x property with lender A which was repossessed and still have 4 x properties with lender B all 4 of which are in negative equity?
Do you have any other properties or significant assets?
Yes i had 1 property that was repossessed which was with lender A and 4 different properties with different lenders., all of which are in negative equity due to the recent recession. I have NO other assets.
Lender A cannot repossess your other properties which our mortgage to other lenders because those other lenders have security against those properties.
Lender A can seek to recover outstanding monies that they can justify against you personally by issuing proceedings against you in the County Court. If they obtain judgement against you then they can seek to recover monies from you using a variety of means such as applying for deductions against earnings, taking a charge against any properties you own and so on.
any charge they take out against any other property however would rank secondary to any existing mortgages which have priority and there is no right to repossess under any such charges they did take out.
and they are not able to "hold" the properties and take rent from the houses right?
never heard of this but has scared me naturally
i think its called "recievership" but iam pretty sure its only for when the actuall lender of the property is foreclosing for arrears due. which is what happened to the property that was repossessed.
Lender A is not able to take control of properties secured to other lenders unless those other lenders are part of the same group.
OK, thank you. I know there are a lot of old and obscure laws out there that lenders can and have used, so i was naturally worried when i heard they could still take control of the properties. Thank you.
What your friend is referring to is an LPA receiver (which is very bad news) which is a right for a BTL lender to appoint a receiver to take control of all the properties over which they have security. THis right arises when you default against a mortgage. So for example let's assume you have four properties, 2 mortgage to lender A and 2 to lender B and you default on one of the mortgages to lender A.
Lender A can appoint an LPA receiver for the two properties you have mortgage to lender A but cannot touch the two properties mortgaged to lender B.
OK thank you so much, lost a lot of sleep over this the last few days. Thank you.
Have I been able to help you with all your questions on the above?
Yes. High rating incoming thank you.