Overview
Once the power of sale under a mortgage has arisen, legal action may be taken to recover possession, if the property is not surrendered or possession cannot be obtained peaceably. The Civil Procedure Rules set out the court procedures and requirements for a claim for possession of property under a mortgage.
The claim must be started in the County Court for the district in which the land is situated. It may only be started in the High Court in exceptional circumstances.
An application for a possession order should be made against the persons who have a right to remain in occupation. This may include a non-owning spouse who is entitled to occupy the house under the Family Law Act. If there is a reasonable prospect of a spouse being able to pay the money due under the mortgage, the spouse should be joined to the legal proceedings.
Where a property includes a dwellinghouse and a mortgage is being enforced, the non-owning spouse may apply to be a party to the action, if he or she is able to meet the mortgage liabilities. The spouse may intervene in the action and make the repayments so that the legal action is terminated.
There has been a recent change in the pre-mortgage protocol which requires that certain steps be taken before possession proceedings are commenced in residential case. This does not apply to buy to let properties. See our separate chapter on the protocol. The Council of Mortgage Lender has published best practice guidelines equivalent to the pre-action protocol.
Details to be Set Out
The Civil Procedures Rules lay down the relevant claim form which should be used. Certain information must be provided in the claim form. Details must be given of steps taken to recover the money.
Certain information must be given in relation to the loan, the mortgage and the property. Particulars must be given of the mortgage account, including the amount of the advance, details of repayment and interest payments. The amount that would have to be paid so as to redeem the mortgage within 14 days, including costs, must be stated. It must show the rate of interest payable and the arrears accrued at commencement of proceedings.
If the claim is due to late payment, then details of the arrears amounts and dates must be furnished. Any known information about the borrower’s circumstances is required. In particular, if he is in receipt of Social Security, this must be stated.
Details must be given of the debt, previous steps taken to recover the money including details of any court dates and hearings and orders. Charges on several properties can be included in the same charge and can be included in a single claim. The relevant details must be given for each property.
Procedure
The court will fix a date for hearing when it issues the claim form. The standard period is not more than 8 weeks. The claim form must be served not less than 21 days before the hearing dates. The hearing date is to be not less than 28 days after issue of the claim.
In the case of a dwellinghouse, there are certain special requirements. The claim must be served on the owner and on any person with matrimonial home rights.
The claimant must, within 5 days of receiving notice of the hearing date from the court, give certain details to the occupiers in possession that proceedings have been commenced stating the details of the claimant and defendant and giving details of the claim and hearing dates. The purpose is to give tenants and others who might not be aware that they are in danger of being evicted, an opportunity to make representations to the court.
The defendant mortgagor should give his reply within 14 days of the service of the claim. Where a possession hearing is involved, the defendant may still appear even if he does not file a defence. There is reply form on the standard claim and a court can take account of failure to file it. The claimant is not entitled to obtain a judgment in default (i.e. without a court hearing) in a possession claim.
A mortgage claim for possession will generally be heard in private. Evidence should be included in a statement of case. Any additional information should be served two days before the hearing. A statement is needed to show that notice has been given to the occupiers. The original or official copy of the mortgage and title should be produced.
The claim may be heard by a district judge in the County Court. On the initial hearing, the court may decide the claim or give detailed directions. If the claim is disputed on serious grounds, management directions will be given in relation to the allocation and management of the case. The judge may order that additional parties are joined to the proceedings as necessary.
Administration of Justice Act
Unlike the case in Ireland until July 2009, there is a statutory power for a court to adjourn a claim for possession of a dwellinghouse. Outside of this legislation, there is no inherent jurisdiction to adjourn unless there is an arguable defence.
The power to adjourn or postpone an order for possession may be exercised where there is a reasonable prospect of the mortgagor being able to pay the mortgage amount within a reasonable time. See our separate chapter on the Administration of Justice Act.
Costs
The mortgagee will generally be entitled to its costs. Failure to follow the pre-action protocol where applicable, can be penalised by restricting or withholding costs.
A court order for costs will be made, if required. Alternatively, costs may be assessed as the mortgage is likely to provide that the cost of litigation is added to the debt secured by the mortgage.
The mortgagor may make an application to the court to direct that an account of the costs be taken. A mortgagor may dispute amounts on the basis that they were unreasonably incurred or unreasonable in amount.
