After-sale shared equity procedures: guidance

13. Enforcement of Primary Lender security / Appointment of Trustee

The terms of the Ranking Agreements used in the various shared equity transactions which have been agreed by the Council of Mortgage Lenders require the Primary Lender to consult with Scottish Ministers prior to exercising its power of sale over the property. There will also be occasions (which happen less frequently) where a trustee in bankruptcy is appointed to the owner's assets.

It is the view of Scottish Government's advisers that the Primary Lender is legally bound to serve a copy of a calling-up notice on Scottish Government at the same time as a copy is provided to the shared equity owner.

If the RSL receives any contact from the Primary Lender or its agents indicating that the Primary Lender is considering exercising any enforcement rights including calling-up the standard security over the property or exercising its power of sale under the security, the RSL should send a letter to the Owner in the terms set out in Annex 7(A).

Please note that neither the Scottish Government nor RSLs as Scottish Government's agents should or can provide advice to the Owner as to what steps they should take.

The RSL should also send an email to the Primary Lender or their agent in terms of Annex 7(B) and forward a copy to the Scottish Government regional housing team keeping them advised of all progress. The Primary Lender may also request Scottish Ministers or as the case may be the RSL to waive the two month period for calling-up notices. If so the terms of the letter /email in Annex 7(B) should be extended as shown.

On occasion the Owner may have a trustee appointed either by the court or through a Trust Deed. Often the appointment will be at the instance of the Owner or, alternatively, by a creditor.

Although such an appointment may trigger a technical breach of the terms of the shared equity agreement, Scottish Government would normally wish to ensure that the Owner was able to remain within the property.

Accordingly on receiving notification that a trustee has been appointed the RSL should email the Trustee in terms of Annex 7(C).

From time to time the RSL may find that the Trustee wishes to sell the property in which case it is possible that the Home Owners Support Fund will be of assistance.

Once again neither the RSL nor Scottish Government should or can provide advice to the Owner and the RSL should email the Trustee in terms of Annex 7(D).