Mortgage reposession proceedings

I am administering an estate for an intestate who died a year ago. The deceased had a complicated estate with some assets overseas and others subject to a dispute which has not yet been resolved.The estate did not liquid assets the sons borrowed money to pay the IHT. There is a mortgage which was payable on an interest only basis.

The bank has issued proceedings even if the Grant has been obtained this month. They have refused to cash the cheque discharging the interest. They say that the power of sale has arisen. They did not freeze the interest when they were notified of the deceased’s death by the son and so interest continued to accrue. They refused any offers for payment until letters of administration were obtained. The mortgage conditions do not state that they will only communicate with the estate when letters of administration are obtained. The property has more than enough equity to discharge their liability. The Hearing is taking place soon. Can we argue that they are being unreasonable by refusing negotiate with the Personal Representatives? The property is already on the market. Will the mortgage protocol assist my client in resisting the mortgage possession application?

Elizabeth Middleton
Elizabeth Middleton Solicitors

Whilst I can understand the bank refusing to negotiate, or accept payment in settlement until a grant has been obtained and the bank is able to comply with its anti-money laundering procedures, including source of funds, it does seem harsh to proceed with a repossession application. It will not only be the costs of the application that are added to the debt, but also the costs of the LPA receiver (which can be substantial).

I suggest a detailed plan for the marketing of the property and repayment of the outstanding debt should be prepared, and shared with the bank ASAP, to enable it to consider how, and if, it might proceed. The plan might specifically address the issue of the accruing interest as, if the bank can be shown to be in no worse position than when the deceased was alive, a court may be willing to allow the PRs more latitude than the bank is seeking.

I read a report recently, where a debtor objected to a bankruptcy petition on the basis that they had tendered payment, but that had been refused. The judge decided that it was for the creditor to decide how they wanted to pursue the debt, and dismissed the debtor’s application for the petition to be struck out. That case could have had peculiar facts, but is perhaps a reminder that once a debtor is in default, the creditor often has the stronger hand.

Paul Saunders