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Time to sell

What are the court's powers when a borrower needs more time to sell the house to pay off the whole of the mortgage debt? Does the borrower need to have contracts in place before the court will adjourn or stay to allow the sale to be completed? In this article Gary Webber suggests not.


The scenario

Every working day up and down the country district judges hear mortgage possession claims. Sometimes the borrower needs more time to sort out his or her finances so that he can pay off the arrears over time. In our case, the borrower accepts that the game is up and that the house has to be sold. All that is being asked for is more time to sell. There has been some interest in the property. In fact, there is a particular purchaser who is reasonably close to exchange and there is a letter from the agent or from the borrower's solicitors (sometimes even from the purchaser's solicitors) confirming the position. However, as yet there is no actual contract for the sale of the property.

The lender's advocate is taking a hard line. He "cites" the Steele case (ie. he mumbles the name of the case) as authority for the proposition that the court only has power to adjourn where contracts have been exchanged (Mortgage Services Funding plc v Steele, CA, unreported, 10 April 1996). This article will argue that this view is incorrect.


The starting point

The starting point is of course s36(1) of the Administration Act 1970: Is the borrower likely to be able to repay the sums due within a reasonable period? Where the property is to be sold the sums due are not simply the arrears but the whole sum due under the mortgage. Neill LJ in National and Provincial Building Society v Lloyd [1996] 1 All ER 630:
    ".. if the mortgaged property is going to be sold, then the security for the mortgage disappears too. So, when one is exercising the discretion under the 1970 and 1973 Acts, the figure to be looked at is not only the arrears, but also the total sum due under the mortgage." (635h)

How long ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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