Law of Property Act 1925

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Law of Property Act 1925 receiver: a person (not necessarily an insolvency practitioner)

appointed to take charge of a mortgaged property by a lender whose loan is in default, usuallywith a view to sell or to collect rental income for the lender. Common in the case of failure of a

property developer, whose borrowings will largely be secured on specific properties .

Why are LPA Receivers needed?

Lenders can face a number of circumstances in which they do not have the capacity, legal orphysical, to deal with properties. Lenders may not wish to expose themselves to the liabilities that

attend a corporate body taking possession of a property directly. LPA Receivers are experts who

can manage the property, deal directly with occupants, outstanding problems, insurance and

repairs. Receivers collect in money to repay the debt, from rents or by selling the property.


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The role of the LPA Receiver is to focus on recovering the debt owed to the lender. This

involves taking control of the property and, effectively, standing in the shoes of the owner. In

most cases the task is then to arrange an early sale of the property in order to repay as much of

the loan as possible. Lenders review each circumstance, or commission a report on the

appropriateness of Receivership. This may highlight issues not previously known to lenders

which may effect how a property can be dealt with. Details of planning permissions and other

licensing should be examined at this stage if at all possible. Factual occupancy arrangementsare checked and, very often, the borrower is asked to contribute, to see if there is a way that the

loan can be repaid without further formal action. Once appointed, the LPA Receiver takes over

the role of the owner and the owner may not deal with the property in any way. The Receiver

has full discretion as to how to deal with the property. If obtaining planning permission or some

other action can improve the realisable value, the Receiver may decide to pursue the

opportunity but is not obliged to do so.


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The Receiver has a duty to act in the interests of the lender who has appointed him and,residually, for the owner of the property as well. If the property has more than one charge

registered against it, securing other loans, then the Receiver has to take these into account as

well.

The Receiver generally has broad powers which include:

Collecting in monies due to the property, for example from rents

Looking after the property, securing it, repairing it or insuring it

Obtaining possession if it is occupied illegally or the occupier has defaulted on his

obligations, for example to pay rent

Seeking planning consent or otherwise dealing with the property

Arranging the letting or sale of the property if the Receiver considers that is the best

way of repaying all or part of the debt

Paying monies collected to repay the loan due

Agreeing a settlement with creditors if needs be

Paying to the owner/borrower any money that is left over after repaying all the

debts and costs.


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Law of Property Act 1925

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Transcript of Law of Property Act 1925