Since January 2011, there has been an increase in the level of appointments of property receivers or fixed charge receivers as they are otherwise known. In the UK, such receivers are more usually referred to as LPA receivers.
This has been brought about by the severe downturn in the property market and the wish by lenders to maximise recovery where the borrower has defaulted on the terms of the mortgage.
The appointment of the property receiver is relatively speedy and inexpensive and is a lenders alternative to taking action against the borrower itself. The powers to appoint the receiver are provided for in the mortgage deed and the relevant legislation goes back as far as the Conveyancing Act 1881. More recently, it is contained in the Land and Conveyancing Law Reform Act 2009 and for NAMA appointed receivers in the NAMA Act 2009.
If debts are not paid to the lender following the usual demand, the receiver can be appointed by a simple appointment document and this appointment is effective from the time of the signature of an acceptance by the receiver. It is always open to a borrower to invite the lender to appoint a receiver.
There are a number of points that are misunderstood in relation to property receiverships. It is important to understand that the receiver acts as agent for the borrower. The receiver’s duties are to the lender who appoints the receiver however the receiver has a responsibility to the borrower to act in good faith. Generally, property receivers will not carry on a trading business.
In order to pursue the best outcome, the receiver will not necessarily proceed to an immediate disposal. The receiver will generally have broad powers to manage the property as agent for the borrower, collect any rental income due, (which will be held in a receivership account), carry out repairs, insure, and arrange a letting or sale if the receiver considers that it is the optimum way of repaying all or part of the debt. Ultimately, the receiver will return any surplus that exists following the discharge of debt and costs, to the borrower.
A property receiver may be removed or replaced by the lender at any time and indeed the receiver may resign. Equally, a borrower can repay the loan along with any costs incurred. In such a case, the receiver should be kept up to date of any intention to settle as this could affect any sale that may be in hand.
Property receiverships will no doubt become the most popular procedure for realising secured debt on real property. The ideal property receiver should be an experienced Chartered Surveyor with a breath of knowledge covering the legal aspects of receiverships, taxation, property management and disposals.
Lisney has a team of experienced personnel dealing with receiverships who will administer each receivership. In each case, the appointment will be taken in the personal capacity of one of our senior Chartered Surveyors who has the skill, knowledge and experience to carry out this work efficiently.
Please also refer to the section on Frequently Asked Questions and The Lisney Fixed Charge Receiver Team.
Any queries in relation to property receiverships should be directed to
Peter Stapleton, Director