Law of Property Act Receivership is where a Law of Property Act (LPA) receiver is appointed by a secured lender to deal with the unpaid debts. A LPA receiver is either an insolvency practitioner or a chartered surveyor, they will sell the property to repay the lender, or they may manage the property and collect rent. They will choose the option that is likely to realise the most value from the property.

The Law of Property Act Receivership is a legal act which gives rights and responsibilities to those lending or borrowing using property. Property can include buildings and land. One of the rights available to lenders is that the lender is able to appoint a receiver if the borrow defaults on payments.

If a borrower is unable to make the agreed payments, the lender will want to take some form of action to recover their money. They will usually start by negotiating with the borrower in order to agree a way forward. If these negotiations break down, the lender will appoint a receiver, once a receiver has been appointed the legal owner of the property no longer has any control over the property.

The role of the Law of Property Act Receiver

The receiver’s role is to recover the outstanding amount owed to the creditor; however they are only able to extend power over the property on which the loan was secured. They have no power over the business itself. Normally this involves the receiver selling off the property, however they may also decide to rent out the property. If the property is already rented the receiver will take over receiving rents, they will also deal directly with occupiers, and will manage the insurance and repairs of the business.

How to avoid Law of Property Act Receivership

Lenders will only appoint a receiver as a last resort, because the cost and work involved in this process is considerable, where possible lenders will work with borrowers to avoid this.

If you do have a loan secured on property and you are struggling to make your repayments you should contact your lender as soon as possible, as soon as you have started communicating the lender will explore the various options available to you.

Getting advice

If you are having problems making your mortgage or other secured loan repayments it is likely that you may also be struggling with other financial difficulties too. In order to begin recovery it is advisable to get advice from a business turnaround specialist, or an insolvency practitioner. They are experts in this area and will be able to determine which measures the business should take.

They may recommend the following measures:

  • Restructuring
  • Refinancing
  • Selling off assets
  • Invoice discounting
  • Invoice factoring
  • Asset finance

To understand the whole range of options and to get help choosing the right one for your business contact us on 0800 597 4757 or enquire online using the form opposite.