06 Jul 2012

Unoccupied Properties: Win for Lenders!

Unoccupied Properties: Win for Lenders!

Rob Aberdein, Partner, explains why Scotland’s repossession law is not all bad.

Rob Aberdein, Partner, explains why Scotland’s repossession law is not all bad.

In times when it seems that decision after decision has gone against lenders, we are delighted to have successfully argued for fewer burdens to be imposed on lenders enforcing their securities. By using what the Sheriff called a “well presented and carefully structured submission”, we persuaded the Court to approve our approach to the enforcement of securities over unoccupied properties.

In Accord Mortgages Ltd v Edwards, a case at Haddington Sheriff Court, we were instructed to enforce a security over a property owned by a deceased borrower. The property lay empty as the estate of the deceased borrower was insolvent. The family of the deceased had no interest in the property; nor did the trustee involved in the bankruptcy of the estate.

Our view has been that, in cases where a residential property has been abandoned or lies empty for a period of time, it is unnecessary to raise a “standard” possession action. Standard actions mean having to comply with the pre-action requirements, and the Sheriff agreeing that it is reasonable to repossess. In empty home cases, the property is not “used to any extent for residential purposes”, which is the definition which triggers the application of the standard process.

In this case, we raised the action based on the fact that the property was not used for residential purposes as it was empty and was not being used at all. The case essentially asked the Court to agree that the Calling-up Notice had been properly served, the property was not used to any extent for residential purposes and that the lender had the right to take possession.

The decision is authority for the suggestion that lenders do not always need to go the long way around where a property has been abandoned and may be at risk, or where the borrower has already left the property but has failed to surrender the property, and cannot now be traced.

If a property can be shown to be unoccupied, or abandoned, our approach can be adopted. The decision is not binding, but the reasoning is clear and accurate and would likely be followed in other Courts should a query arise. It has the potential to reduce the timescales involved in at-risk cases, and reduce the uncertainty which is always involved in the “reasonableness” test.

Rob Aberdein, Partner

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