31 Mar 2020

Lender Possession Proceedings during COVID-19 Crisis

Lender Possession Proceedings during COVID-19 Crisis

Below is an update for our lender clients on the impact of COVID-19 on litigation matters.

England & Wales: Automatic halt to possession litigation and enforcement

In response to the COVID-19 crisis, a new Practice Direction Update to the Civil Procedure Rules came into force on 27 March 2020. This affects all proceedings for possession and eviction in England & Wales under CPR 55 and will apply to all mortgagees, mortgage servicers and LPA Receivers engaged in such action.

 

What has changed?

Under the 117th Practice Direction Update to the Civil Procedure Rules “All proceedings for possession brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession are stayed for a period of 90 days from the date this Direction comes into force.”

The main changes are: 

  • All proceedings for possession brought under CPR Part 55 and all proceedings seeking to enforce an order for possession by a warrant or writ of possession are stayed for a period of 90 days, so from 27 March 2020 to 26 June 2020.
  • Claims for injunctive relief are not subject to the stay set out in paragraph 2 of the PD.
  • The PD ceases to have effect on 30 October 2020.

This is a major and unprecedented change to the Rules and puts a halt on action at least until 26 June, with the possibility of it being extended further. 

Thomas Lillie, Head of Legal (UK) in Aberdein Considine's Lender Service division, said: "These legal changes follow on from guidance from the Financial Conduct Authority for lenders across the UK to grant customers an initial 3 month payment holiday.

"Most lenders had already implemented forbearance measures, including stays on proceedings and adjournments to hearings and evictions. However, some lenders were proceeding with action in appropriate cases, such as where the secured property in question was known to be unoccupied.

"The PD, on the face of it, means such action is stayed and cannot continue, despite properties being empty and their being no risk to customers."

Scotland: “essential business” only

The Scottish Courts and Tribunal Service published a note on 30 March 2020 saying that only “essential business” should call in court. 

What has changed?

Judges have therefore adjourned possession proceedings until later in the year or, alternatively, they have chosen to sist (pause or stay) the court action. In many cases where the court action has been sisted, the Judge has also assigned a hearing date for the court action to be reviewed and stated that parties are strongly encouraged to contact each other in the meantime to settle the case or to narrow the issues in dispute. The arrangements for the Scottish courts are to be reviewed on an ongoing basis.

Aberdein Considine Associate John Di Paola, said: "The judicial position in Scotland is more fluid than that in England & Wales and could be the subject of further change and a variance in how the Scottish Courts and Tribunal Service note is implemented.

"Although we note that lenders and their solicitors are taking proactive steps to manage cases effectively and generally allow forbearance during this time. We will continue to monitor the situation as it evolves."

Contact us

If you would like to speak to either Thomas or John, please click on the links below:

Thomas Lillie

John Di Paola

 
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