The Costs of a Mortgage Repossession Case

The general rule for mortgage repossession cases is that the mortgage lender is entitled to recover the costs of the case under the terms of the mortgage contract.

Costs in Mortgage Repossession Cases

In most types of legal case a court order is required to enable a party to recover their costs from the other side. The procedure for mortgage repossession cases is different. There is a presumption that the mortgage lender was entitled to bring the case and, therefore, may recover the legal costs of doing so.

In most mortgage repossession cases the judge says nothing about costs when making an order. If nothing is said about costs it means that the mortgage lender is entitled to recover them from the borrower. However, it is unlikely that a borrower will receive a bill for these costs – they are usually added to the total amount outstanding under the mortgage.

The Terms and Conditions of a Mortgage and Costs

The terms and conditions for a mortgage should include a clause dealing with the costs of any legal action. This may contain words to the effect that the mortgage lender is entitled to recover all reasonable legal costs incurred as a result of the borrower breaching their obligations under the mortgage agreement. This means that a lender is entitled to the costs of bringing a repossession case due to the borrower’s failure to pay the instalments due under the mortgage.

Mortgage Lenders and Solicitors

Most mortgage lenders employ solicitors to deal with their repossession cases. The solicitors may charge a fixed fee for dealing with the whole case. The reasoning behind this is that most repossession cases follow a very similar path and are rarely disputed on substantial grounds. If a mortgage repossession case is more complicated, the legal costs may go up.

Different Costs Orders in Mortgage Repossession Cases

A judge may make a specific costs order in a mortgage repossession case. Sometimes this has the same effect as if nothing was said about costs. The judge may say “silent as to costs” – and occasionally these words may appear in the order. This means that the usual mortgage repossession rule applies and the costs will be added to the outstanding debt. Alternatively the judge may say “costs to be added to the security”, which again means that the costs will be added to the mortgage balance.

Objecting to Costs in a Mortgage Repossession Case

If a borrower objects to the mortgage lender recovering their costs they may say so during the hearing. There may be cases where the judge thinks that the mortgage lender has acted inappropriately and that they should be penalised for their behaviour - by disallowing some of their costs. Sometimes a hearing has to be adjourned because the mortgage lender is not fully prepared – for example they do not have all of the documents they need to prove their claim. It might be argued that the lender should not be allowed to add the costs of the wasted hearing to the mortgage balance.

Reserving Costs in a Mortgage Repossession Case

In some cases a judge may not be sure whether or not to allow the mortgage lender’s costs. This could happen where a borrower has argued that the lender has not acted reasonably or that the lender’s facts are wrong. The judge may decide to adjourn the case so that the lender and / or borrower can provide evidence to support their case or to disprove what the other party alleges. When a judge does this he may order “costs reserved”. This means that whether or not the lender is allowed to recover their costs will be decided at the next hearing.

Disputing the Level of Costs in a Mortgage Repossession Case

If a borrower wishes to dispute the level of the mortgage lender’s costs they should usually make a formal application to the judge for the costs to be assessed. Because of the terms and conditions of mortgage agreements it is generally assumed that the level of costs incurred by the lender is reasonable. Therefore a borrower should be prepared to give some initial indication to disprove this assumption.

If a borrower manages to convince a judge that the level of costs claimed by the lender may be unreasonably high the judge could order that the costs be subject to a detailed assessment. Borrowers should, however, take note that a detailed assessment of costs in itself will result in further costs being incurred. These additional costs could easily be greater than the costs which the borrower is disputing and outweigh any saving made through the detailed assessment.