Home Owner & Debtor Protection (Scotland) Act 2010 – key issues for

the advice sector, lay representatives & solicitors

Eleanor Hamilton, Principal SolicitorShelter Housing Law Service

Home Owner & Debtor Protection (Scotland) Act 2010

• Amends Conveyancing & Feudal Reform (Scotland) Act 1970 & Heritable Securities (Scotland) Act 1894

• New provisions relating to enforcement of standard securities

• Applies to standard securities over residential property

Court action must be raised

• Sections 1 & 2 – lender must raise court action to enforce standard security

• One exception – voluntary surrender

• Action raised as summary application by lender lodging Initial Writ at Sheriff Court

Pre-Action Requirements • Lender must certify having complied with PARs and detail compliance

• Clear information on terms of security, amount due, charges and any other default

• Made reasonable efforts to agree proposals

• Has given notice to borrower if default on previous agreement

• Borrower hasn’t taken steps likely to result in payment of arrears

• Has provided borrower with information on advice

• Has encouraged borrower to contact local authority

• Has had regard to guidance issued by Scottish Ministers

Initial Court Procedure

• All cases must call in court

• Hearing assigned when application made by lender

• Borrower will receive copy of Initial Writ and intimation of hearing

• No need for borrower to lodge Notice of Intention to Defend or Section 2 Minute

Court hearing

• If borrower doesn’t attend hearing decree not necessarily granted against him

• Sheriff can only grant application if satisfied that lender has complied with PARs and that it is reasonable to grant decree

Court hearing – borrower present• If borrower attends or is represented at

hearing he can oppose application. • Borrower can inform court that PARs not

complied with• Borrower can suggest that even if PARs

complied with is not reasonable to grant decree

Matters for court to consider• Nature of and reasons for default

• Ability of borrower to fulfil obligations within a reasonable period of time

• Any action taken by creditor to assist borrower

• Participation by borrower in a debt payment programme

• Ability of debtor and other residents to secure reasonable alternative accommodation

• Not an exhaustive list

Further Court procedure• Sheriff may order Answers• Sheriff decides how best to proceed in circumstances

of case• May fix further hearing after Answers lodged• May allow time for adjustment• May continue or sist action• May fix an evidential hearing• May grant decree or refuse application

Entitled residents• Entitled residents to be disclosed in Initial Writ or Answers• Sheriff will order Initial Writ to be served on them• Can apply to court for an order using form 11E• Hearing assigned when application made• Sheriff can also order Answers• Application and hearing to be intimated to other parties• At hearing Sheriff to have regard to same matters as for

borrower’s first hearing

Minute for Recall• Done by lodging form 11F• Hearing will be fixed on application• Application and hearing to be intimated to other parties• Decree must be recalled at hearing• If applicant doesn’t attend Sheriff will fix peremptory diet• Only one application may be submitted by each party• Application can only be made if client has not appeared,

been represented or submitted application in proceedings

Lay representatives• Must be an approved lay representative• Must be able to satisfy Sheriff throughout

proceedings that suitable person to represent borrower or entitled resident and is authorised to represent that person

Legal Aid & Expenses• Consider whether client eligible for legal aid• May have a contribution to pay towards costs• May be a recovery of money/preservation of property• Effect of award of legal aid on expenses• Advise client about cost implication of opposing

application

Transitional Provisions• Actions raised pre 30 September 2010 • Calling up notice/notice of default served pre 30

September 2010 • In future cases recall of decree will depend on whether

decree granted in action raised pre 30 September 2010 or after