03 Jul 2012

Catching out 'Sneaky Borrowers'

Catching out 'Sneaky Borrowers'

Nicola-Jane Scott, Solicitor, looks at the sanctions against borrowers available available where leases are granted without consent.

Nicola-Jane Scott, Solicitor, looks at the sanctions against borrowers available available where leases are granted without consent.

I recently wrote an article on a lender’s remedy of obtaining an interdict when faced with a borrower who is granting repeated tenancy agreements in order to frustrate the lender’s attempts to take possession of a property, I thought that it would be worth discussing in more detail what happens when a borrower ignores an interdict and carries on granting tenancy agreements.

Given that breach of interdict is a criminal offence, the court needs to see solid evidence that a breach has taken place. It has to be proven that the borrower knew about the interdict and this is where intimation and, more importantly, the method of intimation is key.

In all cases where we obtain an interdict, we instruct Sheriff Officers (like Process Servers) to intimate the interdict personally on the borrower. However, more and more we are faced with the situation where we do not have an address for the borrower. It would seem that these ‘sneaky’ borrowers not only know that by granting tenancy agreements they can delay possession being taken, but also that by not providing an address (which they rarely do on a tenancy agreement or if they do it is often not their real address) they can avoid action being taken against them. Or so they think!

In our experience, these types of case are on the increase. Should any of our lender clients see patterns emerging with borrowers granting tenancy agreements, I would recommend that you contact us to discuss in further detail in order to ensure that possession can be taken as smoothly and quickly as possible should it be necessary.

In certain cases we engage private investigators! Unlike a ‘desktop tracing agent’, the private investigator is usually local to the area and will be interviewing tenants, neighbours and any connections to the borrower they uncover. The initial results look promising, so watch out ‘sneaky’ borrowers!

Once the hurdle of intimation is overcome and the borrower nonetheless ignores it and grants another tenancy, an application for breach of interdict can be lodged at court (with the approval of the Procurator Fiscal, Scotland’s Public Prosecutor). The borrower will be ordered to attend a hearing to explain his/her actions. If personal intimation has been effected, there can be little defence beyond perhaps alleging that the tenancy agreements have been granted by someone else and that therefore a fraud has been perpetrated. As far flung as that may sound, it was a defence put forward by a borrower in one such action. However, the tenant had, conveniently for the borrower, vacated the property before the case next called in court and thus the lender was able to take possession.

Ultimately if the borrower admits to breaching the interdict, or is proven to have done so, the punishment can be imprisonment or a fine, however, in the first instance a strong reprimand from a Sheriff is perhaps more likely.

Nicola-Jane Scott, Solicitor

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