Tenants of defaulting mortgagees II

Earlier this year J reported the passage of the Mortgage Repossessions (Protection of Tenants) Act 2010 which comes into force tomorrow (1st October), together with the Dwelling Houses (Execution of Possession Orders by Mortgagees) Regulations 2010 (No. 1809) and changes to CPR 55 and CCR O.26 as a result of the 53rd update to the civil procedure rules.

The new law gives some relief to an assured (whether or not shorthold) tenant (as well as to protected and statutory tenants under the Rent Act 1977) where a mortgage lender who is not bound by the tenancy brings proceedings for possession of the tenant’s home. The tenant has two, alternative, forms of relief:

  • before the possession order is made, the tenant may apply to the court for a postponement — of up to two months — of the date for possession
  • after the making of an order, the tenant may ask the mortgagee for an undertaking in writing that they will postpone execution of the order for up to two months and if the mortgagee does not give an undertaking, the tenant may apply to court for an order postponing execution of the order for up to two months.

The second option may not be exercised by someone who was a tenant when the court previously made an order postponing the date of possession. As I read the regulations this would allow, in unusual cases, two separate periods of two months postponement if the landlord had re-let the property in the interim.

In deciding whether to make an order for postponement, the court must have regard to the circumstances of the tenant and whether there have been any breaches by the tenant of its tenancy agreement and whether the tenant might reasonably be expected to have avoided breaching that term or to have remedied the breach. An order for postponement can be made on terms that the tenant makes payments to the mortgagee for their continued occupation. Such payments are, of course, stated not to create a tenancy agreement.

CPR 55.10 already requires that a mortgagee must, within 5 days of being notified by the court of the date of hearing (and so normally more than 3 weeks before the hearing) send a notice addressed to the “tenant or occupier” alerting them to the proceedings and the date of the hearing. A new CPR 55.10(4A) gives the unauthorised tenant of residential premises a right to apply to the court for a postponement of the date of possession.

A further requirement has been added: mortgagees must now give a notice addressed to “the tenant or occupier” no less than 14 days before they execute a warrant. The notice is in prescribed form and alerts the tenant to the possibility of applying for a postponement of possession. Such a notice may be “given” by sending it by first class post addressed to the property, which suggests that the date of “giving” is the date of sending, so that the 14 days would run from the date on which the notice was posted.

CCR Order 26 rule 17 is amended accordingly so that a mortgagee must now certify that they have given such a notice.

While these reforms do not give much protection to an innocent tenant whose landlord has failed to keep up their mortgage payments, they will provide some additional time to find new accommodation.

Posted in Mortgage possession, Uncategorized and tagged , , , .

3 Comments

  1. Sorry, but I think the original posting is inaccurate in one respect. CPR 55.10(4A) doesn’t require lenders to inform unauthorised tenants that they can ask the court to postpone the possession date. It merely gives the tenant the right to apply to the court. The duty to inform the tenant only kicks in when a warrant is being sought (I double-checked after argument with a lender’s sols).
    Big omission in my view – how else will a tenant be aware of the new law prior to the initial possession hearing?

    • That’s exactly right. My profuse apologies for my mistake. I have amended the post.

      You are quite right that it is a big omission. CPR 55.10(3) really needs updating so that the tenant is informed of their right to apply to the court (though in practice you hope they will seek some advice on receipt of the notice – though who from in these straightened times I do not know).

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