New law affecting repossession comes into force

30 September 2010 

The Homeowner and Debtor Protection (Scotland) Act came into force today which will have consequences for those thinking of purchasing a repossessed property and those facing repossession. The act inserts a new section into a 1970 Act of Parliament which still governs repossessions by creditors.

As before, debtors will still be able to voluntarily abandon their property. If they do not, however, creditors can’t repossess it without going through a strict process. They will first have to comply with a number of pre-action requirements before taking the debtor to court. They will only be able to repossess the property if the Court decides it is reasonable to do so. The Court must consider a number of things when it makes its decision including the extent the creditor has tried to help the debtor. Debtors will be able to get lay-representatives to help them argue their case in court.

The Act will make it much more difficult and expensive for creditors to repossess properties. It is intended to provide a much needed reprieve for those struggling to pay their mortgage. The increased costs may, however, be passed on to other customers and result in lenders being less willing to lend to borrowers they consider ‘risky’.

It is very important for conveyancers to understand the law in this area as it is their job to ensure that the correct procedure has been followed when buying a property that has been repossessed. Many people are looking at repossessed properties as a way of securing a bargain at the moment but there are a number if important differences from normal purchases which you should be aware of. Inksters Brian Inkster can advise on all aspects of purchasing from a heritable creditor. You can call him on 0141 229 0880 or send him an e-mail.


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