Professional briefing - The Journal Online
Professional briefing - The Journal Online
Professional briefing - The Journal Online
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Feature Repossessions<br />
<strong>The</strong> situation of home owners faced with<br />
repossession proceedings has become a political<br />
issue. Mark Higgins assesses the likely impact for<br />
creditors and debtors of the Government’s<br />
response, the Home Owner and Debtor<br />
Protection (Scotland) Bill<br />
Homing<br />
instinct<br />
You don’t have to be too<br />
old to remember the<br />
introduction of the<br />
Mortgage Rights (Scotland)<br />
Act 2001, heralded by many –<br />
including myself – as a landscapechanging<br />
piece of legislation,<br />
overturning the almost invincible<br />
position of the creditor in<br />
repossession actions. <strong>The</strong> 2001 Act<br />
did have some effect in altering the<br />
balance of power between lenders<br />
and their customers but, while no<br />
precise figures are available, it<br />
transpired that no more than 10% of<br />
repossession actions between 2002<br />
and 2009 were the subject of a<br />
mortgage rights application.<br />
In many cases, home owners were<br />
either unaware of the opportunity to<br />
make such an application or ignored<br />
their opportunity. In other cases, the<br />
formality and complexity of the<br />
process may have deterred<br />
applications under the 2001 Act.<br />
<strong>The</strong> effectiveness of the Act was not<br />
a matter of political concern during<br />
the relatively benign economic<br />
conditions pertaining in the early and<br />
middle years of this decade. <strong>The</strong><br />
current economic crisis, however,<br />
radically changed the political<br />
climate, and fuel was added to the fire<br />
by the introduction in England &<br />
Wales of the pre-action protocol for<br />
mortgage possession actions, which<br />
led to accusations that the Scottish<br />
Government was not affording the<br />
same protections to Scottish<br />
consumers as those enjoyed by their<br />
counterparts in England & Wales.<br />
Anyone at home?<br />
<strong>The</strong> Scottish Government gave the<br />
matter careful consideration and has<br />
now introduced the Home Owner<br />
and Debtor Protection (Scotland)<br />
Bill, likely to become an Act during<br />
the summer of 2010. <strong>The</strong> policy<br />
objectives of the bill are “to protect<br />
home owners and debtors during a<br />
period of recession”, but there is<br />
also a recognition that the measures<br />
will “continue to be appropriate in<br />
fyi<br />
<strong>The</strong> bill will permit<br />
representation in<br />
repossession<br />
proceedings by<br />
approved lay<br />
representatives<br />
the event of an early recovery”.<br />
Part 1 of the bill (part 2 deals with<br />
sequestration and trust deeds)<br />
changes the landscape in relation to<br />
repossession procedures by separating<br />
out procedures for the enforcement of<br />
securities over, on the one hand,<br />
subjects “used to any extent for<br />
residential purposes” and, on the<br />
other, wholly commercial subjects.<br />
Mortgages and other securities in<br />
the first category will be subject to a<br />
whole raft of new legislation to be<br />
developed over the next six months.<br />
<strong>The</strong> enforcement of commercial<br />
securities will remain largely<br />
unchanged, and none of the changes<br />
set out below apply to bargains where<br />
there is no usage on a residential<br />
basis. <strong>The</strong> very first question creditors<br />
need to ask themselves in future is<br />
therefore “what are the security<br />
subjects being used for?”; but canny<br />
borrowers might consider moving<br />
into their warehouses or factories for<br />
a few nights to avail themselves of the<br />
new protections.<br />
16 / the<strong>Journal</strong> December 09 www.journalonline.co.uk