Section 36 AJA 1970: Delay Mortgage Repossession

Losing your home to a lender is frightening. The law does give some borrowers a chance to press pause. Section 36 of the Administration of Justice Act 1970 lets a judge delay a repossession, but only if you are likely to be able to pay what is owed within a reasonable time. This guide explains how it works, who can use it, what evidence helps and why bridging loans are different.

What section 36 does

Think of section 36 as a pause button. It applies when a lender (the “mortgagee”) asks a court to take possession of land that includes a home. The law calls a home a “dwelling-house”.

If the court thinks you are likely to be able, within a reasonable period, to pay what is due or fix another breach of the mortgage, it can:

• Adjourn (put off) the court case,
• Stay or suspend the possession order, so the lender cannot enforce it for now, or
• Postpone the date you must hand the property back.

The judge can attach conditions, such as regular payments, and can change or cancel those conditions later. The pause does not wipe out the debt.

Does section 36 cover a flat above a shop or other mixed-use property?

Possibly, yes. Section 39(1) says a dwelling-house “includes any building or part thereof which is used as a dwelling”. So a home that sits above a shop or office can count.

If the property has no home in it at all, section 36 gives no power to suspend a possession order. The court may still grant a short adjournment so you can arrange new finance, but that is the judge’s choice and not a right.

What must my mortgage lender do before taking me to court?

For most residential mortgages, the lender should follow the Pre-Action Protocol for Possession Claims based on Mortgage or Home Purchase Plan Arrears in Respect of Residential Property. The protocol does not apply to buy-to-let mortgages (para 4.3). It says that starting a court claim should be a last resort. In summary, the lender should:

• give you clear information about your arrears and how to get free debt advice
• consider reasonable requests to change your payment date or method, and explain in writing if it says no
• answer a payment proposal promptly and, if it refuses, give written reasons within 10 business days
• warn you in writing, with 15 business days’ notice, if you break a repayment agreement
• consider waiting if you have applied for help, for example Support for Mortgage Interest or have a realistic plan to sell, and tell you its reasons at least 5 business days before starting a claim if it decides not to wait

A lender that ignores these steps can be ordered to pay costs. If yours skipped a step, tell the court early. LexLaw’s guide to pre-action protocols explains why courts care.

How does a mortgage possession court claim work?

Mortgage possession claims follow Part 55 of the Civil Procedure Rules. These claims are normally brought in the County Court. The main time limits are:

• The hearing date must be at least 28 days after the claim is issued (rule 55.5(3)(a)).
• You must be given the claim form and particulars of claim at least 21 days before the hearing (rule 55.5(3)(c)).
• Within 5 days of being told the hearing date, the lender must send notice to the property (addressed to “the tenant or the occupier”), to the council’s housing department and to any other registered chargee, and must bring proof to the hearing (rule 55.10).

If you do not file a defence in time you can still go to the hearing, but the judge may take that into account when deciding who pays costs (rule 55.7(3)). First hearings are often short, so bring your evidence in order (see below). The lender’s own paperwork should also show how it followed the protocol.

Who can ask the court for time under section 36?

The named borrower can, and so can anyone who takes title from them. Section 39(1) says “mortgagor” includes any person deriving title under the original mortgagor.

In Cheval Bridging Finance v Bhasin [2008] EWCA Civ 1613, Mrs Bhasin had lived in the property and had transferred it to Mr and Mrs Hastings to hold on trust for her. The lender accepted she could be treated as a mortgagor, and the Court of Appeal saw no reason to go behind that.

Receivers appointed by a lender are covered too. In Menon v Pask [2019] EWHC 2611 (Ch), Mann J held that receivers suing for possession in their own names derive title from the mortgagee, so the borrowers kept their section 36 opportunity. LexLaw explains how LPA receivers work.

How long will the court give me to pay? What is a “reasonable period”?

There is no fixed number of months. In Cheltenham & Gloucester v Norgan [1996] 1 WLR 343, the Court of Appeal said the starting point is the whole of the time left on the mortgage, where the arrears can be paid off by instalments. Judges then look at:

• How much you can afford to pay now and in future;
• Why the arrears built up, and how long your difficulty is likely to last;
• How much of the mortgage term remains and what type of mortgage it is; and
• Whether it is reasonable for the lender to spread or add the arrears over a longer period.

What evidence do I need to delay a repossession?

Promises are not enough. In Zinda v Bank of Scotland [2011] EWCA Civ 706, the Court of Appeal described two stages:

1. The gateway. You must show you are likely to pay the arrears and the further instalments falling due in that period. Where your mortgage lets the lender demand everything early after a default, section 8 of the Administration of Justice Act 1973 tells the court to look only at what you would have owed on the normal payment schedule. Without passing this gateway, the court has no power to suspend.
2. The discretion. Only then does the judge decide, with wide discretion, what conditions to set.

Give the court full, honest and up-to-date figures on income and spending. In Jameer v Paratus AMC [2012] EWCA Civ 1924, the Court of Appeal said a borrower must present this information “frankly and fully”. The borrower there lost: the offer was “too little, too late”. A full witness statement with documents is far safer than telling the judge informally.

Can I sell my home to avoid repossession?

If you plan to sell, the Norgan starting point does not apply. In Bristol & West Building Society v Ellis [1996] EWCA Civ 1294, the court looked at how well the property secures the debt, the effect of delay, how likely the sale is to clear the debt, and the timetable. Courts usually expect a sale to complete within about six months to a year. Courts expect evidence of real marketing done at a realistic price, such as contracts and estate agent letters.

Bridging loans and section 36: what if the loan term has ended?

Many bridging loans are short and repaid in one lump sum. Two rules matter.

• Section 8 only helps if repayment was meant to be spread or deferred. Section 8(1) applies where the borrower may pay the capital by instalments or defer it, but earlier payment is required on default or demand. In Habib Bank v Tailor [1982], an overdraft repayable on demand did not qualify.
• If the term has ended, the whole debt is in play. The court must then be satisfied that all sums due are likely to be repaid within a reasonable period, which is likely to be short.

Cheval v Bhasin shows how hard this can be:

• Cheval made a nine-month bridging loan to Mr and Mrs Hastings in February 2006.
• By the appeal, about £529,000 was still owed on an advance of about £285,000.
• The trial judge said a stay might be possible with “strong and convincing evidence” that the whole sum could be repaid in about three months, or six at a stretch.
• There was no such evidence. The Court of Appeal dismissed the appeal and described the prospect of repayment from the legal action Mrs Bhasin relied on as “a very remote prospect”.

If you are worried about default interest or charges on a bridging loan, see LexLaw’s article on when bridging loan interest and charges are unfair.

What is a time order under the Consumer Credit Act 1974?

If your loan is a regulated agreement under the Consumer Credit Act 1974, the court can make a “time order” that sets reasonable instalments or a deadline to fix a breach, under section 129. For that kind of loan the time order power replaces section 36. Ask a solicitor which route fits your loan.

Can I still ask the court for help after a possession order or warrant?

Yes, but act fast. Section 36(2) allows the court to act on giving judgment or “before the execution” of the order. A lender can usually enforce a possession order by applying for a warrant without another hearing. Even after a warrant is issued, you can still apply to vary the suspension terms or for a further stay, but once the warrant has been executed (you have been evicted) the power to suspend has ended.

What happens after the court presses pause?

Under section 36(3), conditions can cover any sum secured by the mortgage, including future instalments for the rest of the mortgage term. In Zinda, the suspended order stayed enforceable for the whole life of the mortgage, even after the arrears were cleared, because the borrower fell behind on current instalments.

This article is general information for England and Wales and is not legal advice.