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Tenant’s relief from Mortgagee


GMAC RFC Ltd v Jones Lambeth County Court 15/11/2010

With thanks to the Legal Action Recent Developments in Housing Law – report in the January 2011 edition.

This was a case on the operation of the Mortgage Repossessions (Protection of Tenants etc) Act 2010, s.1(4), providing for the tenant of a mortgagor to apply for a two month stay of the execution of a warrant of possession by the mortgagor.

Ms Jones had a mortgage from GMAC (everyone’s favourite sub-prime lender). ON the basis of arrears of mortgage payments GMAC obtained a possession order. In June 2009, after the possession order, Ms Jones granted a 12 month fixed term AST to Mr Elegishu, without getting GMAC’s consent to the tenancy. After the end of the fixed term, Mr E remained in occupation paying rent of £900 per month.

In October 2010 GMAC sent notices to the property, addressed to Ms Jones and ‘any other other Occupier’, as did another mortgagee also entitled to possession.

Mr E’s solicitors requested that no further action be taken for two months. The other mortgagee agreed. GMAC didn’t. Mr E applied to be joined as second Defendant and for an order that the execution of the warrant be postponed for two months under s.1(4) of the Mortgage Repossessions Act.

GMAC strongly opposed the application, arguing that:
i) the tenancy was not valid
ii) possession had already been postponed, as the order had been obtained a considerable time ago and not executed
iii) the tenant was in default, as he had not paid rent to Ms J after learning of the possession orders, instead setting it aside
iv) there was little evidence as to the steps the tenant had taken to find alternative accommodation.

The DJ (DJ Zimmels for anyone who shares my obsession with Lambeth County Court) held:

  • The tenancy agreement was valid and not binding on the mortgagee
  • The two months period started at the date of the hearing
  • Except for the recent setting aside of rent, the tenant was not in default. It was reasonable for him to set aside rent in the circumstances as the tenant was at risk of losing his home and may have a claim against his landlord

Two months relief ordered – warrant not to be executed till 15 January 2011. GMAC to pay Mr E’s costs of the application.

Comment – It is surprising to see GMAC opposing a two month delay where they had failed to seek a warrant for over 18 months after the possession order themselves (and indeed opposing it on the basis of their own delay). One can only presume that they wished to establish something of a precedent for the County Court dealing with tenant’s applications under the Act. If so, it backfired.

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

1 Comment

  1. sgee

    Seems straight forward, apart from the setting aside of rent.

    I take it the possession order was not suspended on terms. If so, why did both lenders hold off for so long? Perhaps they were receiving payments.

    Does anyone know whether a lender can book phantom income from a non-performing mortgage? Perhaps they hold off because it makes their balance sheet look better.

    I was told of a case where the Act was applied against an LPA receiver – deputy judge held the receiver was successor in title to the mortgagee under s.3(5)!


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