If, despite your best efforts, your mortgage lender takes you to court for mortgage arrears, what is going to happen? You might fear that you will automatically lose your home but this is not a certainty. There are a number of options that the court can take, some of which may give you the chance to keep your home.
1. Adjourning the case
"Adjournment" is a technical legal word that means "to put on hold" or "to postpone". If you have psyched yourself up for the proceedings going ahead, an adjournment can leave you feeling rather in limbo. However, adjournments are not always bad news. A case may be adjourned:
- to allow either you or the mortgage lender to provide additional information
- to give you time to make a complaint to the Financial Ombudsman Service (if you consider that your mortgage lender has not dealt with you or your case fairly and lawfully)
- if your mortgage lender did not turn up at the hearing (note that an adjournment will not be granted if you fail to appear at the hearing).
In the above three examples, the court will usually set a new date for the hearing. However, if you have repaid your arrears by the time of the hearing, the court may grant a general adjournment without setting a new date for another hearing. All this means is that if you were to fall into arrears again, the lender does not need to start legal proceedings from the beginning of the prescribed process, and it can commence them from where they were left off at the adjournment.
For whatever reason an adjournment is granted, you should note that one result may be that you are liable to pay increased costs.
2. Striking out or dismissing the case
Once the judge has heard all of the evidence in the case, they may dismiss (or strike out) the case if they are not convinced that the mortgage lender has proved it has the right to repossess your property. If this happens, you may ask the judge for an order that the mortgage lender must be responsible for their own costs. You may still have to pay your costs.
3. Making an outright possession order
This is the "nuclear" option. It gives permission to your mortgage lender for it to take possession of your home. The order will stipulate a date by which you must vacate the property and clear it of any of your belongings (but note that this excludes the property's fixtures and fittings, which must be left behind).
4. Making a suspended possession order
A suspended possession order allows you to remain living in your home provided you adhere to an agreed arrangement to repay the arrears. The suspended possession order will detail this arrangement and will include how much you have to pay, on what dates and for how long. Repayment of the arrears will be in addition to your regular mortgage payments. All the arrears must be repaid by the end of the mortgage term. Sometimes, a court will agree to grant a suspended possession order in order for you to sell your property. However, this will only happen if the court is sure that the proceeds from the sale will be sufficient for you to clear your arrears plus the rest of the mortgage debt. It will be a waste of time asking for this option if local sold property prices and a current valuation on your own property do not confirm that the property's sale will fetch the required sum.
5. Making a money judgment
A lender may apply for a money judgment in order to recoup all the money that you owe on your mortgage. A money judgment is commonly issued at the same time as a possession or suspended possession order. It might be used if, for example, you fail to adhere to an agreed arrangement to repay the arrears, the lender then evicts you and sells the property, but the sale does not produce sufficient funds to repay the entire debt.
What happens if you do not vacate the property by the date specified on the possession order?
The mortgage lender must apply for a warrant of possession. This give authority to the court bailiff to evict you from the property. The bailiff will deliver a Notice of Eviction, setting out the time and date of the eviction, to the property. When you receive the warrant, you may apply to the court to suspend it, but the court is unlikely to grant your application unless you can show you have a viable plan to repay the arrears or to sell the property.
What happens if you fail to keep to the agreed terms of a suspended possession order?
Failure to keep to this agreed repayment schedule allows the mortgage lender to make a court application to evict you from the property - and the lender is not obliged to give you notice that it is taking this option.
Can you apply to change a possession order?
In certain circumstances, you may be permitted to appeal the decision to a higher court, but you must do so within 21 days of the original order being handed down. Expert legal advice is essential but, in summary, you may be able to appeal if:
- the court did not follow the correct procedures
- the law was incorrectly applied
- the judge based their decision on the wrong facts.
Can you apply to set aside a possession order?
In certain circumstances, you may be able to make an application to have the possession order set aside. You will need good legal advice but, as an example, you might want to consider applying if you did not attend the hearing but had good reason for your absence and you have a defence against the mortgage lender's claim.
Can you apply to vary a suspended possession order?
You may apply to vary a possession order, but the court is not obliged to grant your application. Common reasons for making the application are if your circumstances change and you find you cannot afford the agreed repayments or if you cannot sell your property in the timeframe agreed by the court (whether due to lack of buyer interest or falling sold property prices).
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