Here is a question to the blog clinic from John (not his real name) who is a tenant:
I am a tenant in a property which has recently gone into receivership, I have googled this and learned it means that the landlord has not paid his mortgage.
The first I knew about this was a notice posted on my door (which all my neighbours couls see) saying if I didn’t make contact within 7 days the locks would be changed. Obviously this was quite alarming, so I called the company and they have asked me to send them all my paperwork including my tenancy agreement.
They also want me to pay rent to them instead of my landlord. I let the property through an agent who reluctantly gave me his phone number, but he isn’t answering my calls.
I’m really confused and don’t know what to do, the receivership company are quite aggressive and I am worried that if I don’t do as they say then I will be evicted. Please help!
We had a new law come into force on this in October 2010 and, alhtogh your landlords mortgage company may have the right to evict you, they must give you at least two months to find somewhere else to go to.
You can read my article with advice for tenants which I wrote at that time, and you can find guidance on the Communities and Local Government website.
My inclination woud be to wtihhold your rent until the situation is resolved. However don’t spend it – keep it safe in a special (ideally interest bearing) bank account, so it can be paid over promptly once you know for sure who you should be paying.
However long term, unless you can reach agreement with the receivers, you should look for somewhere else to live. Sorry!
I see a lot of these and surprised at the idea they are aggressive. I always find them really relaxed and flexible, even helpful.
Most of what I see is LPA receivership where they will usually take the tenants on for a while. Landlords can often cobble some cash or a deal together and get the property back later on.
The receivers wil often appoint their own managing agents to run things.
I have to confess that my involvement in these cases is simply to buy time for the tenants under the Act that Tessa suggests (The Mortgage Repossession – protection of tenants- Act 2010) but in most cases with LPA receivership they just take them on as tenants anyway.
I notice, and I stand to be corrected, that the Mortgage repossession act seems silent on the matter of who should receive rent during those 2 months. I’d be interested to hear any views from people with more experiecne of that bit
The October 2010 law actually relates to proceedings brought by a mortgagee to protect unauthorised tenants. In this case it sounds like LPA receivers have been appointed by the mortgagee, who are deemed agent of the landlord. They are likely to now have the sole right to receive rent under the LPA 1925 and (probably) the landlord’s mortgage conditions…
Yes but Paul, do you have any insights into rent liability for the 2 months period under the 2010 Act? As I say the Act itself seems to be silent on it, unless i’m missing something
Hi Ben
I wouldn’t call it insight but from experience it goes directly to the mortgagee (or more often their solicitors acting in repossession for them). Act reads:
“The court may make any postponement, stay or suspension under this section conditional on the making of payments to the mortgagee in respect of the occupation of the property (or part of the property) during the period of the postponement, stay or suspension.”
Also, there is a clause specifically stating a tenancy won’t be created if the mortgagee takes direct payment during the suspension.
However, it still wouldn’t apply in this particular case. Payments need to be made to receivers when they are appointed.
I have a lot of espeerience on LPA cases from both sides of the fence.
Cannot deal with this now but will do next Wednesday 5th. Meanwhile John provided the appointed receivers bona fides are good pay the rent to them. Withholding it will not help you at all
Yeah no problem with rent in LPA cases but I’m still not convinced about the rent under 2010 Act Paul.
The passage you quote there refers to the courts but I have never yet had a lender refuse to grant 2 months grace, although they often have a damned good try and that is where I recall the Act not being specific on who gets the rent.
I’m pedantic on this point because a: I see many such cases and b: I have to take a practical approach and the tenants can save 2 month’s rent and use that to fund a move because lets face it, they arent going to get their deposit back are they?
I doubt lenders would pursue any missing monies and on what legal basis would they do so if they tried?
Yes I know its off thread for the OP, I’m just musing really. I’ll shut up now
Yeah it’s an interesting one though.
We deal with many of MR(POT) cases every week, and the lender we deal with insists on a copy of the AST and agreement that the two monthly rent payments are made direct to them (through solicitors) while suspended.
(but you’re right it is seemingly unclear without the court’s involvement – but most tenants agree to the lender’s requirement)
Thats interesting. I have never known the lenders to ask for guarantees of payment. They usually want a tenancy agreement for sure, but most commonly the ones I deal with ask for proof that rent payments have been made, to avoid a fake tenant just claiming they are there to avoid possession.
Some even ask for utility bills but I always tell them that is a step too far when they have the first 2.
Tenants may agree to pay the lender but I am leaned on by the homelessness unit who dont want to rehouse so using 2 months rent to find alternative accommodation is a practical expedient and will become even more so come the abolition of the qualifying offer in November