Can a property repossession by a lender be stopped?

What is a property repossession?

For homeowners, a property repossession is when a lender takes legal ownership of a property, often due to unpaid mortgage payments. If your lender commences court proceedings, the court may grant the lender a possession order. If an outright possession order is granted you have a stipulated period of time, often about 28 days to leave the property, although if you do not do so by this date, you cannot be forced to leave, instead the lender will then need to commence enforcement action, i.e. obtain a warrant/writ of possession.

After eviction the lender will then sell the property and often below market value to recover the outstanding mortgage debt. Any proceeds from the sale are first used to cover the mortgage balance, legal fees and other costs that may be associated with the recovery. If there is any surplus after the deductions, it will then be returned to you.

However, if the sale does not cover the full debt, i.e. because of negative equity, you will still be liable for the remaining balance, which is known as shortfall debt, which can lead to financial strain as lenders may pursue repayment through debt collection agencies or legal action[1].

Repossession is often, or at least should be, the very final step any lender takes when there are mortgage arrears. Prior to the issue of court proceedings, your lender must have written to you and explained how much you owe and how this is calculated.

Your lender must comply with the Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property (Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property – Civil Procedure Rules – Justice UK)

Types of Possession Orders:

There are two types of possession orders, an Outright Possession Order and the Suspended Possession Order.

Outright Possession Order:

This is a court order that allows a landlord to regain possession of their property. This order usually is granted when a Mortgagor, i.e the homeowner/borrower has failed to comply with the terms in their mortgage agreement. An example of this could be not paying the mortgage or breaching other conditions in the mortgage agreement.

The order sets out a date by which the mortgagor must leave the property which could be anywhere between 14 or 28 days after the court hearing. If the mortgagor does not vacate by this date, the mortgagee. i.e. the lender can apply for bailiffs to enforce the order and evict the Mortgagor[2].

Suspended Possession Order:

This is when homeowners can stay in the property as long as they make the payments or obey the conditions set out in the order[3]. The repayment conditions tend to be strict and set by the court[4]. A breach of these conditions will typically entitle the Mortgagee to apply to the court/recommence proceedings.

The information above gives an idea of what the meaning of house repossession is and the types of house repossession orders. But can a house repossession be stopped?

There are other decisions that the court can take in the alternative to ordering possession, such as:

• Adjourning proceedings, usually to allow the mortgagor to raise funds/pay off the arrears or for negotiations to take place between the parties, such as varying the terms of the mortgage agreement. The court may also adjourn to allow you to obtain legal and/or financial advice, or take steps to sell the property yourself.
• Dismiss the Lender’s claim, often when the lender has not taken the required steps prior to issuing proceedings or if there are insufficient arrears.
• The court can unilaterally alter the terms of your mortgage agreement but generally will only do so where there is a realistic prospect of adherence to the revised mortgage agreement terms or where there are exceptional circumstances for the court to consider.

Can a house repossession be stopped?

A property repossession can be stopped even after an order has been made. However, the key thing to remember is that you must act quickly. If the lender has obtained the order, you can attempt to agree with them to arrange a repayment plan or request additional time from the court to sell the property[5]

To minimise the risk of your house being possessed you should communicate with your lender, seek legal and financial advice, attend court hearings (if your house has been repossessed) and explore government schemes[6].

This is the key information needed on whether a house repossession can be stopped. If you have any questions or queries, please contact us.

[1] https://www.gov.uk/repossession

[2] https://www.gov.uk/evicting-tenants/possession-hearings-and-orders

[3] https://www.gov.uk/evicting-tenants/possession-hearings-and-orders

[4] https://www.propertysaviour.co.uk/can-a-repossession-order-be-stopped/

[5] https://www.propertysaviour.co.uk/can-a-repossession-order-be-stopped/

[6] https://www.propertysaviour.co.uk/can-a-repossession-order-be-stopped/