Some time ago, we looked at threats of forfeiture and mortgagees’ obligations (or otherwise) to meet demands for costs where no judgment has been obtained (see our previous article). In this article, we examine what happens once you have paid ground rent and service charge arrears (and possibly costs) following a forfeiture threat.
The mortgage conditions usually permit a lender to make such payments to protect its security and to then add the cost to the mortgage balance. This is potentially misleading because the borrower may think that there is no obligation to repay this sum immediately. In fact, if your mortgage conditions permit, you can make a demand for reimbursement of the service charges you have paid out and, if the borrower does not pay up, you can bring proceedings for possession because failure to pay is a breach of the mortgage conditions.
What you should not do is simply treat the service charges as mortgage arrears and include them in a standard mortgage possession claim. If there are mortgage arrears as well as service charges, you will need to set this out in your particulars of claim. You will need to evidence that you have made the appropriate demand for payment of the service charges (and any such demand should ideally be sent separately from any demand for payment of unpaid monthly instalments). If there are no mortgage arrears, and you are simply bringing proceedings because of unpaid service charges, the particulars of claim will be quite different. In both cases, you will need to show the court:
- That your mortgage conditions permit you to make such a payment where your security is at risk;
- That your security was threatened;
- That you have made the payment; and
- That you have made the appropriate demand for payment from the borrower
This rules out making such claims online through the PCOL (possession claims on-line) court system. You will have to make an old-fashioned paper application for possession.
Reports from a number of sources indicate that judges are starting to examine possession claims closely and, where the monies outstanding include service charges that have been paid to avoid forfeiture, judges are challenging lenders’ entitlement to a possession order.
The good news is that, provided you can satisfy the court on the points we have highlighted, and provided you get your application right, there is no reason why you should not get your order for possession.