we have a client whose brother passed away and he had a mortgage taken out with a private lender.
Upon reviewing the CH1 Deed there was a clause which stated the following:
‘The principal sum shall become immediately payable and the lenders may exercise their statutory powers without giving notice to the buyer: If the borrower falls two months into arrears with any payment under clause 9.2’
Our clients brother who was the borrower passed away in Dec 2021 and his brother was dealing with the funeral, mourning and having the body transferred to his home country and such Jan, Feb, payments did not happen.
The lender wants to initiate repossession proceedings , our client the administer of the estate is willing to cover the arrears from JAN-FEB as his other brother passed away in Pakistan while he was mourning the death of this brother.
Our client has applied for letters of administration. My question is are the lenders solicitors allowed to start repossession proceedings while probate is outstanding as my veiw is once the probate is outstanding the property will be sold and mortgage redeemed.
Any advice would be great.
I leave it to others to advise on conveyancing/land law matters, although I recall from lectures many years ago that statements in mortgage deeds were not actually enacted literally.
However you mention “probate is outstanding” but also that “our client the administer of the estate [sic]” and that “Our client has applied for letters of administration”.
As you probably appreciate on second thoughts, probate is only granted when a will is proved by one or more executors named in the will - in any other case the Grant is of letters of administration. The significance in your case is that whilst an executor’s powers stem from the will [and so apply from date of death, albeit later confirmed by probate] an Administrator’s powers stem from the date of the court order appointing them …
In other words, your client would appear to have no legal standing at present - albeit would be at personal risk if found to have “inter-meddled” in the estate.
A legal charge will usually include somewhere within it a power for the lender to appoint a receiver. This would normally be expected to survive the death of the borrower.
Subject to a close reading of the legal charge, it may well be that the lender is within its rights to enter into possession and sell the property regardless of the situation with regards to a grant to the borrower’s estate. It will be the case that the lender will need to see a grant before accounting t the estate for any residual equity arising from the sale.
I suggest that it would be appropriate to enter into discussions with the lender, to see if the executors will be allowed to make the sale, mindful that a receiver’s fees for dealing with the sale are generally significant.
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals