Mortgages – Power of sale and residential property consultation
The Ministry of Justice has today published a consultation paper on mortgages – power of sale and residential properties. It ends on 28 March 2010.
The consultation was launched in response to the case of Horsham Properties Group Ltd v Clark and Beech [2008] EWHC 2327. In this case the borrowers took out a buy-to-let mortgage. The borrowers fell into arrears. In September 2006 the lender appointed a receiver to manage the property and it was sold at auction. At the time of sale, the buyers did not require vacant possession, but subsequently initiated court proceedings to evict the occupiers – the borrowers having moved into their investment property in breach of the express terms of the buy-to-let mortgage.The borrowers were evicted as trespassers despite their claim that the eviction was in breach of the Human Rights Act 1998. This caused much comment in the media at the time.
- The consultation is on a proposal to require mortgage lenders to obtain a court order or the consent of the borrower before repossessing and selling residential owner-occupied homes.
- The proposed changes would put current lending practice into law, and ensure that borrowers can access the protections offered by the court.
- The proposals relate to residential owner-occupied properties and would not affect buy-to-let mortgages or other commercial loans, nor affect other remedies available to mortgage lenders where a borrower defaults on a mortgage.
http://www.justice.gov.uk/latest-updates/mortgages-power-sale.htm
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