This information applies to Scotland only
If your lender has started legal action to repossess your home you must get help from an experienced adviser. You may be able to come to an agreement with your lender and you may be able to suspend the legal action to give you more time.
Lender starts legal action to repossess the property
When you have mortgage arrears, your mortgage lender will want you to clear them. If you don’t do this, your mortgage lender could start court action to repossess the property to sell it.
When did the legal action start
If your lender started legal action before 30 September 2010 you will need to get legal advice because the procedure for repossession will be different to what is explained here.
If your lender started court action after 30 September 2010 it has a legal responsibility to take reasonable steps called pre-action requirements to try to find an alternative to repossession. Some of the pre-action requirements copy steps from the Financial Conduct Authority Code of Guidance.
Negotiate with the lender
You can get help to talk to your lender if you need it, for example, from a Citizens Advice Bureau - where to get advice.
You may be able to stop the case from going to court by negotiating an arrangement with your lender. You can get free help to do this.
Existing arrangement to pay the arrears has broken down
If you have already had an arrangement with your lender to pay the arrears and this has broken down you may be facing legal action to repossess the property. Even if an arrangement has broken down the lender can still try another arrangement to avoid evicting you.
If it's not possible to stop the case from going to court, this doesn't necessarily mean that you will lose your home. There are procedures that must be followed, beginning with notices that you must be sent by your lender to warn you that repossession procedures are starting.
Letters from the lender and time limits for legal action
Don’t ignore letters from your lender. The letters will provide details of the legal action being taken and they are very important because they explain the time limits in which you have to respond. There are different time limits for you to respond to in the different procedures.
You should get some legal help to make sure that you follow all the procedures and have the best chance of not losing your home. It is particularly important that you have legal representation if you disagree with the lender about the amount of arrears that you owe. You could be eligible for help with legal costs both for advice before any court hearing and for representation at the court hearing if you have a solicitor. You could also appoint an approved lay representative.
If you are the tenant or lodger of a private landlord, you could find yourself facing eviction if they fall behind with their mortgage payments.
Appointing an approved lay representative
If you are the borrower or an entitled resident you can appoint an approved lay representative to represent you in court. Lay representatives should be free and must be:-
- acceptable to the sheriff and competent to represent the borrower or the entitled resident; and
- approved by a person or body prescribed by Scottish Ministers.
Currently lay representatives must be approved. You can get an approved lay representative from:
- an approved independent organisation accredited at the correct level; or
- an approved money adviser in a local authority; or
- an approved money adviser in a citizens advice bureau which is a full member of Citizens Advice Scotland.
If you appoint an approved lay representative instead of a solicitor you will not be entitled to apply for legal aid.
There is further information about lay representation set out in the Guidance on Lay Representation which can be found on the Scottish Government website at www.scotland.gov.uk. This guidance is very detailed and if you need any further help you can go to a Citizens Advice Bureau - where to get advice.
You are an entitled resident and have the right to make representation in court if the property is your sole or main residence and you are:-
- the borrower with the mortgage debt
- the owner of the property (for example, a person may have the title deeds in her/his name but not be the borrower)
- spouse or civil partner of the person with the mortgage or the owner
- a cohabiting partner (opposite sex or same sex) of the person with the mortgage or the owner, but only if the person with the mortgage or the owner is still living with you and the property is your sole or main home
- a former cohabiting partner, still living in the property although the owner or borrower has moved out AND you have a child under 16 together who still lives in the property.
Pre-action requirements for lenders
From 30 September 2010 lenders must complete a series of steps called the pre-action requirements which demonstrate that reasonable efforts have been made to find way of dealing with your mortgage arrears without resorting to court action to repossess your home. The lender must:
- provide you with clear information about your arrears
- make reasonable efforts to agree with you a repayment proposal
- allow you reasonable time to pay off the arrears before seeking repossession
- provide with information about where you can get further information and advice
For more information about pre-action requirements see www.keepingyourhome.co.uk.
Code of conduct for mortgage lenders
If you took out your mortgage from 31 October 2004 onwards, your mortgage lender has to follow the FCA rules when dealing with mortgage arrears.
Your mortgage lender should not start court action against you without following certain rules laid down by the Financial Conduct Authority (FCA). The rules say that your mortgage lender must treat you fairly and give you a reasonable chance to make arrangements to pay off the arrears, if you are able to. They must consider any reasonable request from you to change when or how you pay. Your mortgage lender should only start court action as a last resort, if all other attempts to collect the arrears have failed.
If your mortgage lender doesn't follow these rules, you can complain to the Financial Ombudsman Service.
Procedures your lender can use to start to recover the arrears
When you have mortgage arrears for the property you live in there is a number of procedures the lender can use to start repossession proceedings. This action will usually only be taken if you have already had several warnings by letter asking you to deal with the arrears. The procedures involve writing to you to ask you to pay back the arrears and warning you that further legal action will be taken if you don’t. The form that the letters take and what they ask you to do are:
- a notice of default – to repay the mortgage arrears within one month; or
- a calling up notice – to repay the whole amount of the mortgage outstanding within two months; or
- an initial writ for repossession under section 24 of the Conveyancing and Feudal Reform (Scotland) Act 1970 (a section 24 notice). This is setting a court hearing date usually for 14 days after sending the letter.
From a UK Supreme Court judgement on 24 November 2010 it has been decided that the only legal route to start a repossession is with a calling up notice. If you have had action taken against you by a notice of default or an initial writ get specialist advice from a CAB adviser or Shelter.
It should explain clearly in the letter which procedure is being followed.
For more details about the action the lender can take see www.keepingyourhome.co.uk.
If you have arrears on a loan for which your home is a security (a secured loan or a second mortgage) the lender may be able to demand the whole amount of the loan or second mortgage. If you have this type of loan or a business loan you should get advice from an experienced money adviser. You can get money advice from a Citizens Advice Bureau - where to get advice.
What happens next if you can’t reach an agreement
If you have not come to an agreement with your lender to repay the arrears and the lender can prove that it has met the pre-action requirements it will apply to the court to repossess your home.
It's worth remembering that it is almost never too late to try and come to an agreement with your lender.
Even if your lender been awarded a decree to evict you, you might still be able to come to an agreement that would allow you to avoid eviction.
Action you can take in the court
Your repossession case must be heard in court unless you have decided to opt for voluntary repossession. The person with the mortgage and other occupants known as entitled residents can appear in court.
The entitled residents are:
- the owner or the person with the mortgage
- the spouse, civil partner or partner of the owner or person with the mortgage.
If your relationship with the owner or the person with the mortgage has broken down and they have moved out you will still be able to apply to suspend the lender’s action if:
- you lived together in the property for at least six months before they moved out
- you have a child in the house who is, or is treated as, a child of the owner or person with the mortgage.
Your lender has to tell you that you have these rights or the notice to take legal action for repossession is illegal.
For more details about your rights see www.keepingyourhome.co.uk.
Special notice to get help from the local authority
When a lender serves you with a notice to repossess the property you live in, it has to also let the local authority know that it is taking this action and that you might end up being homeless. The local authority has specific legal duties to you if you are homeless.
This notice is called a section 11 notice. The local authority may get in touch with you to offer support and advice about housing. It may also get in touch with the lender if you want it to try to work out a solution. If you have not received a section 11 notice and the legal action is progressing get in touch with the local authority's housing department.
More detail about a section 11 notice on www.keepingyourhome.co.uk.
What happens at the court hearing for repossession
There will be a court hearing for repossession. It is advisable to have a solicitor or an approved lay representative to represent you. If you use a solicitor you might be entitled to help with legal costs, particularly if you are not working.
You should definitely attend the court hearing. Lots of people might choose not to go because they are very anxious about the process and too embarrassed about having mortgage arrears.
It is important to go to make sure that your legal representative or approved lay representative does everything that can be done to protect your position.
Don't worry - you will not have a criminal record or be at risk of going to prison because you have a repossession case at the sheriff court. You will not be evicted from your home on the day of the court hearing.
Ask for more time
If you think that you can clear all of your mortgage arrears in a short amount of time, you can ask for the court to give you time to do this. This is called asking for the case to be continued. If your case is continued, another date will be set for your case to call back at court. If you have cleared all the arrears, no further action will be taken, but if you have not kept to the agreement, the sheriff will then decide whether your lender should be allowed to repossess the property.
Will you have to speak in court
You or your legal or lay representative will be asked to explain:
- why you got into difficulties with your mortgage (for example, because you have had health problems or have been made redundant)
- if you have done anything to come to an arrangement with your lender
- why you haven't stuck to an arrangement if you have already made one
- how you hope to pay off your arrears and get your mortgage back on track
- if you have made efforts to find somewhere else for you (and your family) to live
- how long it might take you to find alternative accommodation.
What will the lender say
Your lender will have legal representation. The solicitor should tell the court:
- how much your arrears are
- how long you have been in arrears
- their view of how you came to be in arrears
- about any effort they have made to contact you and come to an arrangement to clear the arrears including evidence that the pre-action requirements have been met
- if you have kept to any arrangements that you made to clear the arrears.
What decisions can the court make
The court can make a number of decisions about the case for repossession and your application to suspend the lender’s action. In summary the court can:
- dismiss the case. This would usually only happen if the lender has failed to follow correct procedures or does not have a case
- continue the case, for example, because you have made a new arrangement to pay off the arrears
- grant the lender a repossession order.
For more detail about what happens in court and what decisions the court can make see www.keepingyourhome.co.uk.
You can also get help from a Citizens Advice Bureau - where to get advice.
Recalling the decree
If you or one of the entitled residents did not appear and was not represented in court when the decree was granted you can ask the court to recall the decree. The sheriff will consider at the case again.
Eviction from the property
Decree to repossess the property
When the lender has a decree to repossess the property and to evict you, you can still try to negotiate. It is never too late to negotiate with your lender. As it has a decree it may be prepared to let you have a bit more time. You will probably have to make a new offer of payment towards the arrears and a plan for how you can continue paying the mortgage to avoid being evicted. You can ask the court to recall the decree if you did not appear or were not represented in court when the decree was granted.
Once the court has granted a decree to your lender you could be asked to leave the property quite quickly. A charge for your removal with 14 days notice from the date of the court granting the decree is usually served on you by sheriff officers.
Preparation for eviction
It may only be a few weeks before you have to leave the property. You should get some advice and support from an experienced adviser to help you to:
- confirm where you are going to be living - the local authority should have been in touch with you already. If it hasn’t been in touch you must get in touch with the housing department if you are going to be homeless because it has a duty to provide you with accommodation
- organise what to do with your possessions - you may have to move to a smaller property but you should try to keep any valuables
- find moderately priced removers or hire a van
- make a list of all the agencies you have to notify about your move - particularly gas, electricity and telephone services who could continue charging, the local authority council tax department and the Post Office redirection service
- organise a new school for your children if necessary and a doctor near to your new home
- contact the sheriff officers to ask for details of the exact date of the eviction if you haven't already been informed.
For help and advice, go to the Scottish Legal Aid and Shelter website at www.keepingyourhome.co.uk.
You can also get help from a Citizens Advice Bureau - where to get advice.
The date of the eviction is when the property is repossessed by the lender. It can then be sold. The sheriff officers will make sure you have vacated the property then they will secure it to ensure that you can’t get back in.
A representative of the lender may also attend so that they can repossess the property. It is normal practice for the locks on the property to be changed to stop you re-entering.
If the sheriff officers arrive when you are not at home and change the locks, and your possessions are still in the property, you will need to contact your lender. Your lender should then arrange to let you into the property to collect your possessions.
More information about eviction see www.keepingyourhome.co.uk.
You can also get help from a Citizens Advice Bureau - where to get advice.
What happens after you have left the property
The lender has repossessed your property to sell it. Many lenders will add your property address to their own insurance policy. However you should check if this is done. You should also check the position about maintenance and repairs. The lender will want to make sure that the property is in as good a condition as possible.
Your lender has a duty of care towards you when selling your property. This means that they must get the best price that they can for it. However, in practice, lenders often sell properties at auction, and repossessed properties sold in this way often sell for less than they would on the open market.
If you believe that you have been treated unfairly by your lender, for example, because they took a long time to sell your property and your arrears went up because of this, you should complain to the Financial Services Ombudsman.
Once your lender has sold your property they will:
- take what it is owed from the proceeds of the sale
- deduct any legal and estate agents' fees
- repay any other lenders if the property has been used as security for a loan
- give anything which is left over to you - although there may be nothing left over to give you and you may have other debts to pay off.
If the money from the sale of the property is not enough to repay what you owe, you will have to pay the difference. This is called a shortfall. The lender will send you a bill for the shortfall. The lender may go to court to force you to pay this amount.
If you don't pay off the mortgage shortfall and then buy another property, the lender of your first property may apply to court for powers to force you to pay back the shortfall. This could include making you bankrupt.
If there is a shortfall after your property has been sold, you should get advice from an experienced debt adviser, for example, at a Citizens Advice Bureau - where to get advice.
In mortgage cases, the lender is usually allowed to pass on all their recovery costs to you, the borrower. They do not need a court order to do this.
- court fees
- solicitors fees and expenses
- witness expenses.
Costs will be added to your mortgage account for every hearing.
The court may be able to order that some or all of the costs are not added. For example, if you are getting legal aid. However the terms of your mortgage agreement might entitle the lender to recover its costs from you.
The situation may be different if you are getting legal aid. Your solicitor will be able to tell you more about this.
Taking out another mortgage after eviction for mortgage arrears
If you’ve been evicted for mortgage arrears, you may have problems taking out another mortgage. This is because details of any payments you have missed are held on file by credit reference agencies, such as Experian or Equifax. Mortgage lenders will contact them to find out whether you have a good credit rating.
Your past credit history may not stop you taking out a mortgage, but if you still owe money on a mortgage and try to take out another one, you may have difficulty getting a loan.
Financial Ombudsman Service
If you're not happy with the way your lender deals with your case, you can make a complaint to the Financial Ombudsman Service. The Financial Ombudsman Service is independent and impartial. It will decide if the lender has acted fairly in your case. It may take a few months for your case to be settled. You will need to use your mortgage lender’s internal complaints procedure first.
Financial Ombudsman Service
Consumer helpline: 0800 023 4567 (free for people phoning from a landline) or 0300 123 9123 (free for mobile phone users who pay a monthly charge for calls to numbers starting 01 or 02) (Monday to Friday from 8.00am to 8.00pm; Saturday from 9.00am to 1.00pm)
Institute of Financial Planning (IFP)
Personal Finance Society (PFS)