Mortgage disputes

Falling into default on a mortgage (whether on your home or on a commercial property) does not mean that possession and the loss of your property are inevitable. Borrowers have a range of rights and remedies: the right to contest possession proceedings in court, to require a lender to engage in forbearance negotiations before taking enforcement action, to challenge the conduct of a receiver appointed over your property, and, in certain circumstances, to bring a claim against the lender itself for unfair conduct.

Whether you are a homeowner facing the prospect of losing the family home or a business borrower with a commercial portfolio under threat, seeking early legal advice is the single most important step you can take. The options available narrow significantly the further enforcement has progressed.

What is a mortgage dispute?

A mortgage dispute arises when there is a conflict between a borrower and their lender (or a receiver appointed by the lender) about the enforcement of a mortgage or legal charge over property. The most common trigger is default: the borrower has missed payments, and the lender is seeking to enforce its security, either by bringing possession proceedings in court or by appointing a receiver to take control of and sell the property. Mortgage disputes also arise where a borrower challenges the accuracy of the arrears or the charges applied or disputes the validity or scope of a receiver’s appointment.

The legal framework differs depending on whether the mortgage is residential or commercial, and on how it is regulated.

Residential mortgages are regulated by the Financial Conduct Authority under the Mortgage Conduct of Business (MCOB) rules, which impose significant obligations on lenders in relation to arrears handling and forbearance.
Commercial mortgages fall outside that regime, but lenders remain subject to general contractual duties and, in certain cases, to the constraints imposed by the Consumer Credit Act 1974.

In all cases, a lender seeking possession of a residential property that contains a dwelling house must obtain a court order and is subject to the court’s discretion to adjourn or suspend proceedings where the borrower is likely to be able to clear the arrears within a reasonable period.

Where a lender appoints a receiver, the receiver takes control of the property as the borrower’s agent but with a primary duty to the appointing lender. The receiver may collect rental income, manage the property, and, if the mortgage deed confers the power, sell it. Receivers are not insolvency practitioners, and their appointment does not require a court order, meaning enforcement can move quickly. Understanding the limits of the receiver’s authority, and the circumstances in which their conduct can be challenged, is an important part of protecting the borrower’s position once an appointment has been made.

You will find answers to common questions around mortgage disputes in the FAQs at the bottom of this page.

What does a mortgage dispute solicitor do?

Our property disputes team advise on defending or negotiating the terms of possession proceedings, securing forbearance arrangements with lenders, and challenging receivers who have exceeded their authority or failed to exercise their powers with due care.

We act for residential and commercial borrowers facing lender enforcement action across the full range of circumstances, from a homeowner in temporary arrears seeking time to reorganise their finances, to a commercial borrower disputing the conduct of a receiver appointed over a portfolio of investment properties.

The property disputes team works to get to the heart of the dispute, understanding the client’s objective and managing the dispute to analyse the risks and achieve a resolution as swiftly, efficiently and cost effectively as possible. The team’s ethos is simple: solve the problem.

Why choose B P Collins as your mortgage dispute solicitors?

Our aim is always to resolve the dispute without the need for court intervention (using private negotiation, mediation, expert determination and other forms of alternative dispute resolution). Where court proceedings are unavoidable, however, the property disputes team has the expertise to take a claim through to trial.

With over 60 years of experience, we’re consistently ranked by Chambers UK and The Legal 500 for the strength of our property disputes practice. Our solicitors represent both residential and commercial borrowers in the face of lender enforcement, whatever the circumstances – from a homeowner in short-term arrears who needs time and space to restructure their finances, through to a commercial borrower challenging how a receiver has handled a portfolio of investment properties.

As with most disputes, early advice can frequently result in a swift outcome, avoiding unnecessary escalation and protecting your position before it becomes more difficult to assert.

Contact our mortgage dispute solicitors today

For further information or advice please contact our mortgage dispute lawyers. Our teams are based in London, Thame and Gerrards Cross, and can be contacted on 01753 889995 or at enquiries@bpcollins.co.uk.

Mortgage disputes FAQs

What happens when a mortgage falls into default?

Mortgage default most commonly arises when a borrower falls behind on repayments, but it can also be triggered by other breaches of the mortgage conditions: failing to insure the property, letting it without the lender’s consent, or falling into arrears on a linked account. Once default occurs, the lender becomes entitled in principle to enforce its security.

What happens when a residential mortgage falls into default?

As these are regulated by the Financial Conduct Authority (FCA), the lender must follow the arrears management rules in the FCA’s Mortgage Conduct of Business (MCOB) before commencing possession proceedings. Those rules require the lender to treat borrowers fairly, consider forbearance options, and not commence possession proceedings as a first resort. A lender that issues a possession claim without first engaging meaningfully in forbearance discussions risks having those proceedings stayed by the court.

What happens when a commercial mortgage falls into default?

The lender’s freedom of action is wider: there is no equivalent regulatory framework requiring pre-action engagement, and a lender may appoint a receiver or issue proceedings more quickly once the contractual trigger for enforcement has been met. The trigger for appointment is determined by the mortgage deed itself, and the lender does not need a court order to appoint a receiver.

In both cases, taking advice at the first sign of difficulty (before a formal demand is served or proceedings are issued) significantly improves the range of options available to the borrower.

Can I stop a lender taking possession of my home?

Often, yes. You can often stop or delay possession if you act early and demonstrate a realistic plan to repay arrears over time or to sell the property in an orderly way. The strength of your evidence is crucial.

In a regulated residential mortgage, a lender must obtain a court order before being able to take possession.

If a borrower subsequently falls behind on a suspended possession order, the lender can apply to enforce it without bringing fresh proceedings. However, courts retain the power to vary or re-suspend an order if circumstances change, and a borrower who seeks advice promptly when difficulties re-emerge is often able to avoid enforcement even at that stage.

Does the lender have to try to negotiate before acting on regulated residential mortgages?

Yes. The FCA’s MCOB rules impose detailed obligations on lenders in relation to arrears handling. A lender must: contact the borrower as soon as arrears arise; provide clear information about the arrears and any charges being applied; consider whether a forbearance arrangement (such as a payment holiday, a temporary reduction in payments, or capitalisation of arrears) is appropriate; and only commence possession proceedings where other options have been exhausted or are clearly unsuitable.

A lender that fails to comply with MCOB before issuing a possession claim runs the risk of those proceedings being stayed by the court at the first hearing. The Pre-Action Protocol for Mortgage Possession Claims (which applies to all first charge residential mortgage possession claims) also requires the lender to take specified steps before issue, including exchanging information with the borrower and considering whether the claim could be resolved without proceedings.

Does the lender have to try to negotiate before acting on commercial mortgages?

There is no regulatory framework, meaning the lender’s pre-enforcement obligations are governed primarily by the mortgage deed and any general contractual duties of good faith. However, a lender that acts in a way that is commercially unconscionable or that fails to comply with the express terms of the mortgage (for example, appointing a receiver before the contractual trigger has actually been met) may be restrained by injunction or found liable in damages.

What is an LPA receiver?

An LPA receiver (also known as a fixed charge receiver where appointed under the mortgage deed rather than solely under statute) is a person appointed by the lender to take control of the mortgaged property following default. The appointment does not require a court order.

Once appointed, the receiver takes over the management of the property: they can collect rent from tenants, insure the property, and, if the mortgage deed extends the statutory powers (as is almost always the case in modern commercial lending), sell it. The receiver is deemed to be the borrower’s agent, which means that the borrower remains liable for the receiver’s acts and expenses even though the borrower has no control over them.

What can I do if an LPA receiver is appointed?

Hold the receiver to their legal duties/conduct. The receiver’s primary duty is to the appointing lender: they manage the lender’s security for the lender’s benefit. However, the receiver does owe the borrower a duty of good faith and a duty to take reasonable care to obtain the best price reasonably obtainable if and when they sell.

Prove receiver misconduct – claims against receivers are not straightforward. To succeed the borrower must prove intentional conduct amounting to more than mere negligence and encompassing either an improper motive or an element of bad faith.

Challenge the validity of the appointment itself, which can be done by injunction to restrain the receiver from continuing to act.

What can I do if the arrears figure my lender is relying on looks wrong?

A borrower who suspects the arrears figure is wrong should first write formally to the lender asking for a full statement of account, a breakdown of all charges applied, and an explanation of how payments have been allocated. If the lender cannot provide a clear and coherent account, that is itself significant. Where proceedings have already been issued, the court can be asked to adjourn to allow the figures to be reconciled, and a lender that cannot establish the precise amount of the arrears will struggle to obtain an order based on that figure.

Where the dispute goes further, the borrower may be able to bring or counterclaim a claim for damages or for restitution of unlawfully applied charges.

What if I want to sell the property myself rather than let the lender or receiver do it?

The approach differs depending on the stage of sale reached. Before a receiver is appointed or proceedings are issued, the borrower can simply sell in the ordinary way, subject to the lender’s consent where required by the mortgage conditions. Once a receiver is appointed it may be possible to agree with the lender and receiver that the receivership is suspended to allow a borrower-led sale to proceed, particularly where there is evidence that the borrower can achieve a better price than the receiver is likely to obtain.

Where a possession order has been made, the court can be asked to suspend execution of the order for a defined period to allow the borrower to complete a sale. A borrower who approaches the court with a credible sale plan, supported by evidence of an offer or marketing activity, is in a significantly better position than one who simply asks for more time without a clear exit.

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