Suspended Possession Order
When possession cases come to court lenders usually ask for a "28-day possession order". This will entitle the lender to repossess the property after 28 days. If the lender's case has been put together properly, and nothing is said on behalf of the borrower, the judge will usually grant this. However, the judge does have a wide range of powers which allow him to postpone possession either by adjourning the case, by granting a possession order for a longer period or by granting a suspended possession order.
To make a suspended possession order the judge has to be satisfied that the borrower can pay at least the monthly instalments due under the mortgage plus an additional monthly sum to clear the outstanding instalments, or arrears, over a "reasonable" period. The judge will want to know about a borrower's income and expenditure so that he can decide what is fair in the circumstances. He will need to strike a balance between what the borrower can afford and the lender's entitlement to get their money back.
What is a "Reasonable" Period?Most courts used to say that up to five years was a reasonable period in which to clear the arrears. However, a 1996 case called Cheltenham & Gloucester v Norgan decided that a reasonable period can mean up to the end of the mortgage term. The judge, the lender's representative or an adviser may refer to the Norgan minimum - this is the amount that would have to be paid every month, in addition to the monthly instalment, to clear the arrears by the end of the mortgage. This is the absolute minimum payment that a court can allow when granting a suspended possession order.
Strictly speaking the borrower should provide evidence to prove that they can afford to make the required payments towards the mortgage. However, judges will usually take a borrower at their word if they say they can afford them. Most lenders will try to convince the judge that a reasonable period is somewhere between 12 months and four years.
Agreeing a Suspended Possession Order before the HearingMany lenders will agree terms with the borrower for a suspended possession order before the hearing. However, the lender may have a set idea of what they will accept which has nothing to do with either a borrower's ability to pay or the relevant case law. For example, a lender may say that the arrears "have to be cleared" within 12 months. This can lead to borrowers agreeing to payments they cannot maintain. Borrowers should never agree to pay more than they can afford - the terms of the order will be breached and the lender will apply for an eviction date.
How Possession Orders Work
- Possession Order in 28 days.
The order becomes enforceable 28 days from the date of the hearing. If the property is not vacated after this time the lender can apply for a warrant of eviction.
- Possession Order in 28 days suspended on payment of the Current Monthly Instalment plus £100 per month towards the Arrears. First payment by 1st February.
Even if no payments are made the order is still not enforceable for 28 days. As long as payments are made by the 1st of each month the lender can do nothing to enforce the order. However, after 28 days the lender is entitled to enforce the order as soon as one payment is missed or a payment is late. If the monthly instalment goes up the borrower still has to pay an additional £100 each month. A borrower can always pay more than ordered but must never pay less.
If the lender is not sympathetic it is always possible to apply to the court for another hearing. The borrower can ask the judge to reduce the payments required for the order to remain suspended. Judges are usually sympathetic to homeowners but there is the risk that they will interpret the failure to maintain payments as evidence that the borrower cannot afford the mortgage. This again highlights the importance of not agreeing to make payments that cannot be maintained.