Monday, November 17th, 2008
With mortgage defaults rising, banks are increasingly seeking to repossess properties on which they have advanced mortgages. When proceedings are commenced, it is by no means unusual for a bank to find that the property is not occupied by the mortgagee, but by someone else – often another family member.
Under the law, an ‘undisclosed tenant’ (one who is there without the knowledge of the mortgagor) has no right to remain and cannot prevent the repossession, even by paying the mortgage. However, there are exceptions to this rule. If the occupier is the spouse or civil partner of the mortgagee, then the lender will have to negotiate with them. Another issue may arise if the person living in the property claims to have contributed to the mortgage and offers to continue to pay it. Unless the lender makes it clear than any payment is accepted as being made on behalf of the mortgagee, the occupier may acquire equitable rights over the property.
In a recent case, a woman who had contributed to the mortgage on a house owned by her husband’s cousin was faced with an application for possession, from UCB Home Loans, after her marriage broke up and significant arrears built up on the mortgage. She also faced an application for possession from her husband and his cousin. She claimed she had built up an equitable interest in the property because she had paid the mortgage. UCB agreed that they would not seek possession of the property if she paid the arrears and that they would treat any payments made as being made on behalf of her husband’s cousin.
When she fell into arrears again, UCB again sought possession and she sought to suspend the order. The court ruled that UCB was prevented (by a doctrine called estoppel) from not treating her as if she were the mortgagee and ruled that the possession proceedings should be held in abeyance pending the conclusion of the divorce proceedings, when the divorcing couple’s financial arrangements could be settled.
This case illustrates that the courts will seek to ensure that in circumstances similar to these, fairness will prevail. If you are faced with a claim for repossession of your property, taking professional advice promptly can mean the difference between retaining your home and losing it.
For partial advice on all property problems contact Jonathan Friend.
For advice on divorce or separation contact Marie Stock.
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