I have defaulted on a loan that has a first charge on the

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Some lenders will start repossession proceedings after three months but the Financial Conduct Authority are castigating lenders for doing it if the arrears are postcode related.

Be careful because the solicitors costs will add tens of thousands of pounds onto this if it goes to court and they get a possession order. You need to be right on the case. Otherwise the legal costs will gobble up any equity you can still end up with a shortfall.

I think your concern is whether your new mortgage will complete before the repossession proceedings.

It depends how far the repossession proceedings have gone and if they have not yet issue court proceedings, then it’s unlikely their application would get to court before it is completed.

You have presumably got a solicitor acting on the remortgage for you. You need to get that solicitor to write to the lender threatening proceedings telling them exactly what is happening and where it is up to and that if they issue court proceedings, these will be premature and you will raise that unreasonable and premature action to the attention of the court and asked the court to award costs against them.

However if these are buy to let properties and they are buy to let mortgages you need to be extremely careful and get this done as quickly as you can because in many buy to let mortgages the lender is allowed to appoint a LPA Receiver who will simply come in (without a court order!) And take over the property and manage it on behalf of the lender pending an order for sale.

I so sorry to be negative about this but good luck with your problem. I’m afraid you are going to need it because the powers of LPA Receivers are Draconian.

Until you have paid the arrears completely up to date (which you are liable to do regardless) you have no chance of getting the LPAR removed.

Indeed, even if you have paid the arrears completely up to date, the chances are that you will never get them out if the lender thinks that there are ever likely to be problems with the property again, and even then, if you can prove that there are not, they can simply take a hard line because, under the Law of Property Act 1925 they are allowed to do this and they are also allowed to do it under the mortgage conditions.

The legislation is extremely out of date and there are calls for it to be amended as you will read on this website

http://www.property-forum.co.uk/

There have been many incidences of LPAR mismanaging the property and selling undervalue however the problem you face is that to take the lender to court and to take the LPAR to court for breach of fiduciary (financial) duty would incur’s considerable legal costs which the majority of borrowers, having just paid arrears off, are not in a position to do.

It could easily cost between 10,000 and £20,000 to take a lender to court although you would get back cost back in the event your claim was successful.

At this stage in time, it would be worthwhile putting all the papers in front of a barrister who specialises in such matters to get an initial advice.

Barristers advice in respect of this will properly cost between £600 and £800 plus VAT but at least then you will know whether it is worthwhile taking the lender to court.

I’m sorry that the most of this is not the answer you were looking for but there is no point in me misleading you.

I have a duty to advise you truthfully and honestly, even if the answer is unfavourable.

Hopefully, the Lender is not going to appoint LPAR.

So in a nutshell your mortgage should complete before the repossession but make sure that your solicitor advises the lender every step of the way.

Thank you for letting me assist you with your legal question. I am glad that I was able to help.

I am not certain whether that answers the question for you or not, but I am happy to answer any specific points arising from this.

It will be my pleasure to help you again either further with this or any future questions you have

Kind regards

Stuart

You said both properties are fully tenanted HMOs. That’s why I assumed that they are buy to let properties.

The process is that they give you notice that unless the arrears are paid by a particular date they will make an application to court for an order for possession.

It wouldn’t normally be one hearing and they get possession. It would be a hearing and the court would normally grant some indulgence if there was a real prospect that you will be able to finance away from this lender which is exactly what you’re doing.

Depending on the mortgage conditions they may be able to simply put a LPAR into the property with no further ado. That’s the problem with properties which are let out. You say it’s not a buy to let mortgage which confuses be because the property is let out and if the lender knows that it was going to be let out, then it would normally be a buy to let mortgage which allows the lender to simply take control. They don’t need a court order. It would be different if you were living in the property. Completely different.

Assuming there is no condition which allows them to appoint LPAR, then it’s a couple of court hearings which can take months if not years.

Thank you. If this is a private individual then it’s unlikely he is going to have the LPAR clause in which case he’s going to have to go through the court process which is going to take months.

I did say unlikely. Not impossible. But it is indeed unlikely

I do hope that the solicitor knows something about LPARs and buy to let properties otherwise the answer may be wrong. He cannot come to that decision without looking at the mortgage agreement.

That’s why I said unlikely not impossible.