Haven’t you ever heard of LPA Receivership?

When you borrow money on a property, including taking a mortgage out on your house or flat, you sign a Mortgage Deed. I bet you didn’t read it fully, did you? One of things it allows for is that the lender – the mortgagee – can take the property over, and sell it, if you fail to comply with the terms of the Mortgage Deed. Perhaps everyone knows about that one, but there are some strange things about it – see a separate article “Who owns the house?” One of the things the Mortgage Deed provides for and which you didn’t notice (or did you: go to the top of the class if you did) was the appointment of an LPA Receiver. So it’s of some interest to know what an LPA Receiver is.

Most Mortgage Deeds provide that, if the terms of the Mortgage Deed are not complied with and there is a demand for repayment which is not met (which it rarely would be, I suppose) then the borrower – the mortgagor – gives an irrevocable authority to the lender to appoint a Receiver to take over the property. The Receiver acts as the agent for the borrower, but effectively at the direction of the lender.

The old meaning of “Receiver” was “receiver of rents”. That does still apply where the property is an investment, including a buy-to-let flat or house, but generally speaking the job of the Receiver is to: sell the property; recover the costs of the receivership; repay the bank; and, if there is anything left over, remit it to the borrower. As you can imagine, in most real situations there isn’t much left over, otherwise the problem would not have arisen in the first place.

If you are the borrower, the Receiver is acting in your name and as your agent, but is barely taking any notice of anything you have to say, other than to ensure that he proceeds in good faith.

A second frightening thought, perhaps, for anyone contemplating borrowing money on a property.