Six months ago, Greg was forced to give up his career as a professional rugby player after he broke his leg very badly in a car accident. Amber has only been working part-time as a beauty therapist for the last few months as she is trying to pursue her dream of becoming an actor and is currently studying on a performing arts course. As a result, their income has reduced substantially, and they have not paid their mortgage repayments for the last three months. Greg is hopeful of becoming a full- time rugby coach and has been on a coaching course to enable him to get a position. He has an interview with a rugby club next month. Amber has been invited to audition for a part in a new musical in a West End theatre starting in September 2020.

QUESTION

Question 1

Amber and Greg purchased the freehold of a large 5 bedroomed house in Stevenage in 2019 for £750,000. The purchase was financed by Amber and Greg who paid the deposit of £100,00 and a mortgage from Island Mortgages for the balance of £650,00.

Six months ago, Greg was forced to give up his career as a professional rugby player after he broke his leg very badly in a car accident. Amber has only been working part-time as a beauty therapist for the last few months as she is trying to pursue her dream of becoming an actor and is currently studying on a performing arts course. As a result, their income has reduced substantially, and they have not paid their mortgage repayments for the last three months. Greg is hopeful of becoming a full- time rugby coach and has been on a coaching course to enable him to get a position. He has an interview with a rugby club next month. Amber has been invited to audition for a part in a new musical in a West End theatre starting in September 2020.

Island Mortgages have recently written to Amber and Greg, informing them that as they are in arrears with their mortgage repayments Island Mortgages are going to start court action to repossess the house in the next seven days.

Due to the uncertainty surrounding Brexit, property prices have fallen, and the house is now only worth £550,000. Greg’s former team mate, Ovie, has offered to buy the property for £500, 000 but Island Mortgages say this is insufficient and will not agree to the sale.

Advise Amber and Greg of any remedies Island Mortgages have to realise their security and any remedies Amber and Greg might have.

Question 2

In June 2000 Tariq the freehold owner of a house at no 10 Victoria Street granted a lease by deed to Melanie of the ground floor flat in the house, for 99 years at a rent of £100 per month. The lease contained a covenant by Tariq to keep the exterior of the house in good repair. It also included a covenant that prohibited the tenant using premises for business purposes and a further covenant that the lease could only be assigned or sub-let with the landlord’s consent. The lease contains a forfeiture clause.

In January 2010, Melanie assigned the lease to Lorcan, with Tariq’s consent and in January 2014 Tariq sold the freehold of no 10 Victoria Street to Seamus.

Lorcan is a personal trainer in a gym and supplements his income by providing private personal training in a makeshift gym in his flat. The occupants of the other flats have complained to Seamus about the number of visitors to the flat in the evenings and weekends and the parking problems this causes for the occupants.

Lorcan has also not paid any rent since January 2019. When Seamus chased him for the rent Lorcan refused to pay until Seamus replaces the PVC windows which have become mouldy with condensation. Lorcan says this has aggravated his asthma.

Advise the parties. How would your answer differ if the lease had been granted in June 1995?

The word count has to be about 2800-3000 words

ANSWER

Remedies in Mortgage Repossession and Leasehold Disputes: A Legal Analysis

This essay examines two scenarios involving legal issues related to property ownership and leases. The first scenario involves Amber and Greg, who are facing the possibility of mortgage repossession due to their financial difficulties. The second scenario centers around Lorcan, a tenant who has breached several lease covenants and withheld rent. In both cases, we will explore the remedies available to the parties involved and analyze how the outcomes would differ if the leases were granted in different years. This analysis aims to provide a comprehensive understanding of the legal principles and options available to the parties.

Question 1: Remedies in Mortgage Repossession

Amber and Greg’s situation involves potential mortgage repossession by Island Mortgages due to their failure to make mortgage repayments. Before discussing the remedies available to each party, it is essential to outline the rights and obligations of both the mortgagee (Island Mortgages) and mortgagors (Amber and Greg).

Remedies available to Island Mortgages

Island Mortgages, as the mortgagee, has several remedies to realize their security. These may include:

 Possession order and sale: Island Mortgages can seek a court order for possession of the property and subsequently sell it to recover the outstanding mortgage balance.

Appointing a receiver: Island Mortgages may choose to appoint a receiver who will manage the property and collect rental income to pay off the arrears (Munnery & Munnery, 2023).

Forfeiture: If there is a power of sale clause in the mortgage agreement, Island Mortgages can exercise their right to sell the property to repay the mortgage debt.

Remedies available to Amber and Greg

Amber and Greg, as the mortgagors, have certain remedies to protect their interests. These may include:

 Negotiating with Island Mortgages: Amber and Greg can attempt to negotiate with Island Mortgages to find a solution that allows them to retain ownership of the property. This could involve restructuring the mortgage or agreeing on a repayment plan.

Applying for a suspension order: In some cases, mortgagors may seek a suspension order from the court, which suspends the possession proceedings for a specified period, providing an opportunity to repay arrears.

 Selling the property voluntarily: If Amber and Greg are unable to meet the mortgage obligations, they may consider selling the property themselves to repay the mortgage debt and avoid repossession (Voluntary Sale of a Home to Avoid Repossession – Shelter England, n.d.).

In the given scenario, Island Mortgages rejects Ovie’s offer to purchase the property for £500,000. It is important to note that Island Mortgages has an obligation to act in good faith and consider reasonable offers for the property. If Ovie’s offer is considered reasonable, Amber and Greg may have grounds to challenge Island Mortgages’ refusal and propose a mediated settlement or court intervention to resolve the dispute.

Question 2: Leasehold Disputes and Remedies

In the second scenario, Lorcan has breached several lease covenants and withheld rent. Additionally, he demands window replacements due to alleged health issues. We will analyze the available remedies for both Lorcan and Seamus, the freehold owner, while considering the differences in outcomes if the lease was granted in June 1995 or June 2000.

Remedies available to Seamus

As the freehold owner and landlord, Seamus has various remedies to address Lorcan’s breaches and non-payment of rent. These may include:

 Forfeiture: Seamus may seek to forfeit the lease due to Lorcan’s breaches of the lease covenants. This would result in the termination of the lease and Seamus regaining possession of the premises.

Service charge recovery: If the lease allows for it, Seamus may be able to recover the cost of repairing the exterior of the house from Melanie, the original tenant.

 Legal action for rent arrears: Seamus can take legal action against Lorcan to recover the outstanding rent payments.

Remedies available to Lorcan

Lorcan, as the tenant, also has remedies available to him. These may include:

1. Requesting repairs: Lorcan can request Seamus to fulfill their obligation to maintain the exterior of the house as per the lease covenant (Repairs and Maintenance Sample Clauses: 5k Samples | Law Insider, n.d.). However, Lorcan’s demand for window replacements due to his asthma condition may require medical evidence to support his claim.
2. Negotiating with Seamus: Lorcan can negotiate with Seamus to address the concerns raised by the other occupants, such as visitor numbers and parking issues. This could involve limiting the number of visitors or finding alternative solutions.

If the lease had been granted in June 1995 instead of June 2000, there could be differences in the available remedies and potential outcomes. The specific terms and clauses of the lease agreement would govern the rights and obligations of the parties. It is essential to examine the exact wording of the lease, including any amendments or additional agreements made over time, to determine the remedies available to each party and the legal consequences of their actions.

Conclusion

In both scenarios presented, there are several remedies available to address the legal issues. For Amber and Greg, negotiating with Island Mortgages and exploring alternative solutions might help them avoid repossession. In the case of Lorcan and Seamus, Seamus can consider forfeiture, rent recovery, or initiating repairs, while Lorcan can request necessary repairs and negotiate with Seamus to address the concerns raised by other occupants. The outcomes and available remedies may differ based on the specific circumstances and terms of the agreements. It is crucial for all parties involved to seek professional legal advice to understand their rights, obligations, and potential remedies in their particular situations.

References

Munnery, J., & Munnery, J. (2023). Receivership: Process and Procedure. Real Business Rescue. https://www.realbusinessrescue.co.uk/company-administration/receivership/process-and-procedure 

Repairs and Maintenance Sample Clauses: 5k Samples | Law Insider. (n.d.). Law Insider. https://www.lawinsider.com/clause/repairs-and-maintenance 

Voluntary sale of a home to avoid repossession – Shelter England. (n.d.). Shelter England. https://england.shelter.org.uk/professional_resources/legal/home_ownership/mortgage_debt/voluntary_sale_of_a_home_to_avoid_repossession