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Seeking possession against a borrower - Strettons' receivership Spring 2020 top tip

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As receivers, we regularly work with solicitors and other property professionals. James Teagle, a partner at Bevan Brittan solicitors, offers an insight into the process of receivers seeking possession of a property when it is occupied by a tenant of the borrower and further outlines a recent landmark case which highlights the powers of the receiver when the borrow is in occupation.

Receivers (typically, there are two receivers are appointed jointly to ensure continuity) can bring proceedings in the name of the borrower because they are appointed by the lender to act as the borrower's agent. In effect, the receivers 'step into the shoes' of the borrower (the tenant's landlord) and are therefore entitled to obtain possession of the property using the same powers which are available to a landlord.

Where, however, receivers seek possession of a property that is occupied by the borrower, a subtly different approach is required. This is because a borrower cannot seek possession of the property that he is occupying.

To overcome this, the receivers can bring proceedings against the borrower in his (and his co-receiver's) own name as the appointed receivers.

 

This approach was ratified in the recent case of Menon v Pask (which was on similar facts), which confirmed that: 

  • the receivership is to be carried out in the interests of the lender (not the borrower's interest);
  • the receivers have a power of sale, and parties often expect sales to be with vacant possession (so the receivers would need possession against the most likely occupiers); and,
  • the wider powers of the receivers cannot be properly exercised unless they have possession.

 

The Menon decision is more likely to apply to unregulated loans but it serves as a prompt to lenders to review and (if necessary) update their security documents to ensure that they contain an express right for receivers to bring possession proceedings in their own names against the borrower.

We hope this is a useful snapshot and more detailed information can be obtained from James Teagle or Strettons' receivership team.

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James Teagle

 

Partner at Bevan Brittan LLP

T: 0370 194 5443

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Strettons' Receivership Team

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Paul Joseph, MSc MRICS

 

Registered Property Receiver

DD: 020 8509 4473

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Ben Tobin, BSc FRICS

 

Registered Property Receiver

DD: 020 8509 4422

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Philip Waterfield, BSc FRICS

 

Fixed Charge Receiver

DD: 020 8509 4411

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A Glimpse into the Receivership Process

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Strettons' receiver, Paul Joseph featured in 'A glimpse into the Receivership process' by Industry Magazine Bridging & Commercial in their latest publication.

read here2