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Stuart J
Stuart J, Solicitor
Category: Law
Satisfied Customers: 26775
Experience:  Senior Partner at Berkson Wallace
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I have defaulted on a loan that has a first charge on the

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I have defaulted on a loan that has a first charge on the property due to issues
JA: Where are you? It matters because laws vary by location.
Customer: with the mortgage app. They are threatening court action to repossess the property. I’d like advice on what the process is and if there is a notice period to provide additional time to pay the loan england
JA: What steps have you taken so far?
Customer: we had a mortgage offer in place that was withdrawn as I own the neighbouring property and the lender on that one wouldn’t allow a charge that the new lender requested. So we are now going through conveyancing on a new mortgage application which is being processed and will be through in a matter of weeks
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: we are six weeks in default currently

Hello. My name is***** you for the question.

It is my pleasure to assist you today.

I have been in the legal profession, in High Street practice, for almost 30 years so I have wide range of experience in a great many different aspects of law.

Please bear with me and I will be online and off-line from time to time and therefore, may be delayed getting back to you.

Although I am shown as online, I may be dealing with other people, on the telephone, or typing.

Please be assured that you will receive an email once I have written a reply.

Just Answer is not a chat service, it’s an email reply board and therefore sometimes it will be minutes, sometimes it may be longer, even hours or overnight.

I apologise in advance if you suffer a delay.

Kind regards.

Who was the loan with?

and is next door a BTL?

all background information would be very helpful please

Stuart J and 2 other Law Specialists are ready to help you
Customer: replied 11 days ago.
Hi Stuart, I purchased both properties from the same vendor last year, one with a mortgage (#20) and the other vendor finance (#22). The vendor ‘loaned’ the 90% balance of £234k with an interest rate of 6%pa with two months interest free. He has a first charge on the property (#22) and the loan was to be repaid in full on the 10th May. Due to the issue with the mortgage application and the lender wanting a charge on #20 the lender refused and as such we lost the mortgage and are now applying for a new mortgage with the same lender on number #20. Both properties are fully tenanted hmos
Customer: replied 11 days ago.
I would like to understand what the process is with regards ***** ***** can they simply take the property back or is there notice period after a default? What is the process with applying to a court etc?
Customer: replied 11 days ago.
The call just finished without me speaking to anyone?!
Customer: replied 11 days ago.
Hello?!!
Customer: replied 11 days ago.
It says this is completed but I’ve not had a response could you kindly let me know what’s happening?

I’m sorry, but the telephone call was made by someone else. If they don’t call you back, then contact customer services please.

I am sorry but I do not work directly for Just Answer, I am an independent solicitor and therefore I don’t have access to your account. Indeed, I couldn’t access that part of the system even if I wanted to.

So I don’t know what you’ve been charged or what you been paid and I cannot help with any billing enquiries.

However you can contact customer services because they are very helpful.

They can be contacted in a variety of ways including telephone, email and chat via the links below or on the telephone number below.

https://www.justanswer.com/help/contact-us

http://ww2.justanswer.com/help

*****@******.***

there is also a telephone number: 0808(###) ###-####/p>

I am certain that Customer Services will be able to resolve things for you.

Meanwhile let me answer your question as far as I can.

Just give me some time to take please.

Customer: replied 11 days ago.
That was very confusing, the call just said goodbye and hung up? Will contact them separately but happy to just liaise via chat for some basic advice. Online I can see the process of people applying for a charge order but is that a different process to a first charge notice that is already in place?

I am just typing. Give me five minutes please.

Customer: replied 11 days ago.
No problem

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

Customer: replied 11 days ago.
Thanks for the response but it didn’t really answer my question?
Customer: replied 11 days ago.
I want to know what is the process?
Customer: replied 11 days ago.
It isn’t a BTL mortgage, it’s simply a first charge on the property against the loan between us.
Customer: replied 11 days ago.
wanting to know can he take possession or is it a case of applying to court for a force of sale? If he it is that he takes possession of the property he will also then need to take on the AST’s in place and be responsible for the legalities of running the hmo with 5 tenants? Then he has to sell it which would take months and I receive any equity left after costs?

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.

You refer to “he”. So I assume it’s not a corporate lender. If it’s not a corporate lender it’s unlikely (but not impossible) there is a condition in the mortgage allowing the appointment of LPAR in which case he would have to go through the court process

Customer: replied 11 days ago.
It is a classed as a loan as opposed to a BTL mortgage and he has the first charge which is acting as the security. I am waiting for the copy of the first charge to see if there is a clause for them to simply repossess or bring in a receiver

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.

Customer: replied 11 days ago.
Fantastic thank you

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

Customer: replied 11 days ago.
I’ve just spoken to a litigation solicitor from the company who did the conveyancing and they would have to apply through court plus he would be legally responsible for the property and running of the hmo and would have service section 21 notices and then sell the property which would obviously take months. So hoping he will just see sense that waiting for the refinance to be put in to place is the easiest and quickest solution

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.

Of course he may have looked at the agreement and come to that conclusion which is a different thing altogether.