With reference to the 6 or 12 year period. When does 'First Contact' actually apply. The company chasing me say that as they wrote to an address for a period of 9 months - even though I did not live there at the time of writing - that this is when they made contact. I disagree with them as, obviously, I had no knowledge of them contacting me a this or any other address until they did make 'Contact' with me in October 2000. Due to this I beleive that they are not allowed to pursue the claim under the Council of Mortgage Lenders agreement.

Also, if they do not have a money judgement - they have written to say they do not as no court proceedings took place - do I have a debt?

-- (mattyc@ntlworld.com), November 14, 2000

Answers

The 'six year rule' is actually a voluntary code, and so the lenders have made up their own rules to suit their own interests. Thus, 'contact' for them equates to the act of simply sending out a letter. They say that if they make contact or 'begin proceedings' (again, for the lenders, this simply means the act of sending out a letter, which I think is a moot point) within 6 years of selling a repossessed property, then their pursuance of a claim is in accordance with the Mortgage Lenders' code. The lenders claim that they actually in law have 12 years to pursue a mortgage shortfall 'debt'. Whether this is really true or not remains to be tested in the Court of Appeal. It was due to be tested earlier this year, but Abbey National settled with the couple involved (the Holmans) and paid their costs. As the Holmans were on legal aid, they had no choice but to go along with this. This was a shame, because as a result the Limitation on shortfall remains a grey area of law. But it is of interest that the Law Commission is reviewing the Limitation Act; and the Law Society recommends a period of 3 years for creditors to chase alleged debts. The Human Rights Act also requires that civil hearings be brought within a 'reasonable time'; one would imagine that lenders' undue delays in starting proceedings might arguably be 'unreasonable'.

-- Eleanor Scott (eleanor.scott@btinternet.com), November 14, 2000.

Very useful advice about the Human Rights Act. Can they really justify taking us to court 10 years after selling our home and how will they justify selling the property at B#20000 below market value. The collection agency is now threatening to send an agent round (James Bond perhaps!) and charge us B#100 for the priviledge. That's B#15100 they're not going to get from us then!!

Keep the faith.

-- Sue Gates (sue.gates@ntlworld.com), November 14, 2000.

I've been doing some research into various other repo cases reported in various media, and from what I can gather, although the lenders have agreed to 6 years as part of the Council of Mortgage Lenders Code, the actual mortgage agreement would also seem to play a part.

One particular case is Global Financial Recoveries -v- Jones - "HIS LORDSHIP said that the central issue concerned whether any claim upon a shortfall after a mortgagee had realised his security, even where the mortgage was executed as a deed, was a claim in simple contract, with a limitation period of six years (section 5 of the 1980 Act), or a claim upon a specialty, with a limitation period of 12 years (section 8(1) of the 1980 Act). "......

"In the present case, a term of the mortgage agreement, which was contained in a deed under seal, specifically addressed what happened in the event of a shortfall after the realisation of the security. Consequently such a claim was founded upon a specialty and not on simple contract. "

So it would seem that the type of mortgage document one has also plays a part.

For those where it has been over 6 years since any contact is made, the 6 year limitation can be used as argument, but if the lender points to a 12 year limitation, then surely an argument of bringing a claim within a reasonable time (Human Rights Act) applies?

In your case Mattyc, I would suggest that you write back and ask for copies of all letters that were sent during that 9 month period. If there are a number of them, the question must be asked, what happened to the letters when they were delivered? One would have thought that the occupier of the property would have sent them back marked "unknown at this address". You might, if you are pursued further, want to ask the occupier if they recall receiving such letters.

I think that a story such as "we wrote to you for 9 months...." to an address you didn't live at is a very poor argument and should be proved.

-- pendle (pendle@amun-ra.demon.co.uk), November 14, 2000.

Another point re: Global Financial Recoveries -v- Jones, is that from what i was informed of and argued with Dribble, Upyours and Allslops was that the term that they refered to in that case was only put in sometime in the 1990's and that not all mortgages have that term included therefore not everybody is potentially liable for 12 years. Only newer ones had that clause inserted, mine never. I asked them for a copy of this term in my deeds whilst on the phone to them, suffice to say that they were unable to provide a copy. I just replied that it was ok, they can show me it at court. A few days later they agreed to settle!

-- Terry Harborne (terry.harborne@ukgateway.net), November 16, 2000.

.....the term that they refered to in that case was only put in sometime in the 1990's and that not all mortgages have that term included therefore not everybody is potentially liable for 12 years......

Exactly. Most repossessee's are of the opinion that the lender has just 6 years or they're statute barred, and its not surprising since the CML members have "agreed" to the 6 year limitation. But at the end of the day, depending on the mortgage document you have, you could still be faced with a 12 year limitation.

Everyone's case is different. Understandably, some people are assuming that what has happened with one person, will be the same with them, and thats not necessarily true. The mortgage document itself, does appear to hold some of the answers.

The next question that I ask now is, when you purchase a house, your solicitor will go through the mortgage papers, amongst other things to ensure that all is okay. Why then, do they not spell out to you what happens if you're repossessed, and what the mortgage document says regarding shortfall etc? Any other legal document would be gone through with a fine toothcomb, clarifying and reclarifying every little point, why not then with house purchase?

Pendle

-- pendle (pendle@amun-ra.demon.co.uk), November 16, 2000.