Key Post "The lender is threatening to appoint a receiver to my buy to let property"

Brendan Burgess

Brendan Burgess

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I only know the basics about this, but I will compile a Key Post. Comments and corrections welcome.

Good background reading here:

Fixed Charge Receiverships - Friel Stafford

Avoid Receivers at All Costs - New Beginning

The key point is that the lender does not have to go through the courts to appoint a Receiver.

Most mortgage contracts allow the lender to appoint a receiver who can collect the rent and then sell the property.

Some mortgage contracts (which lenders?) only allow the lender to appoint Rent Receivers. In other words, they are not entitled to sell the property.

If a Receiver is appointed, there really is nothing you can do other than challenge it on technical procedural issues.

The following defences do not work:
  • It's unfair
  • The arrears are only €5,000
  • I was in arrears but I have cleared them now

The tenant will pay the rent directly to the Receiver. The tenant may be less enthusiastic about paying rent, and so this will make your financial situation worse.

When the property is sold, it is likely to get less than market value, and you will continue to be liable for the shortfall.
 
Grounds for challenging a Receiver

If you had an agreement with your lender and the loan was subsequently sold to a vulture fund, the agreement still holds. So you could argue, that they are not entitled to appoint a Receiver.

If you are now living in the property yourself, then it is your family home, and they are not entitled to appoint a Receiver.

If the mortgage agreement does not allow them to appoint a Receiver. Check with your solicitor.
 
If a borrower obtains a Protective Certificate for a PIA then a lender cannot appoint a Receiver whilst the PC is in force. If a Receiver is already appointed when the PC is granted, he may not proceed with selling the property.

There can be technical grounds for challenging the appointment of a Receiver, such as the Deed of Appointment being incorrectly drafted etc. In many cases such challenges can be fruitless, as the debt still remains etc.

In a few cases it may be possible to do a deal with a fund/bank by re-financing the loans on the property etc.

Jim Stafford
 
Jim

That is great thanks.

I am surprised that the banks don't appoint more receivers.

They seem to sell the loan to a vulture fund who are quite happy to appoint a receiver over even small arrears.

Brendan
 
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