Legal Information Centre


12 November 2008 by Mary Heaney

Lenders found not to require a court order for repossession

The High Court has ruled in favour of a mortgage lender which repossessed a property without going through the courts, undermining Gordon Brown's plea to the banks that repossession only occurs as a last resort.

The High Court has ruled in favour of a mortgage lender which repossessed a property without going through the courts, undermining Gordon Brown’s plea to the banks that repossession only occurs as a last resort.


The court found no fault in the decision of sub-prime and buy-to-let lenders GMAC-RFC to appoint receivers and auction a property without obtaining a court order. If the case had gone through the courts a judge could have arranged alternatives methods for repayment. Instead the individuals were evicted for trespassing in their former home by its new owners.


The lender’s actions are legitimised by a 1925 law entitling them to sell a property if the borrower misses two mortgage payments. The ruling follows the prime minister’s claims that lenders will be required to offer borrowers options if they should fall into arrears and Justice Secretary Jack Straw has ordered an inquiry into the loophole.


David Briffa, a property partner at London solicitors Child & Child, puts the lender’s actions down to the need to move quickly in a falling market. Briffa also calmed homeowners’ fears by highlighting the particular circumstances of the case. “The important point here is that this was a buy-to-let property,” he says. “The lender said that had it been an individual’s own home it would not have called in receivers.”





More News & Guidance