What counts as arrears?

In order to check what sums are in arrears, it is important to request a redemption figure from the lender.

This content applies to Scotland

What counts as mortgage arrears

Before lenders can apply to court to repossess a property they must provide the borrower with the terms of the loan including the amount due and any arrears or charges that they have incurred. [1] 'Debt' under a standard security does not include an obligation to pay rent or other periodical sum related to land. [2]

If there is any uncertainty over the amount that is owed, the lender may need to clarify this by issuing a certificate of the sum due. If a calling-up notice has been issued and the lender does not provide such a certificate, the borrower may be able to challenge the calling-up notice. [3] Depending on the precise wording of the standard security, the borrower's spouse or civil partner may be jointly and severally liable for the original security and may also be liable in relation to other un-discharged debts to the lender.

Depending on the precise wording of the standard security, the lender may be entitled to refuse to discharge the security so long as any other debts to the bank remain in existence. This might include unrelated loans and overdrafts. Therefore, the lender may refuse to discharge the security so long as any other debts, such as overdrafts, remain in existence. [4]

Last updated: 7 February 2020

Footnotes

  • [1]

    s.24A(1B)(2) Conveyancing and Feudal Reform (Scotland) Act 1970 as added by Pt. 1 s.4(1) Home Owner and Debtor Protection (Scotland) Act 2010

  • [2]

    s.9(8)(c) Conveyancing and Feudal Reform (Scotland) act 1970

  • [3]

    s.19(9) Conveyancing and Feudal Reform (Scotland) Act 1970 

  • [4]

    For a discussion on this, see Standard Securities, by Cusine and Rennie, 2nd edition, Butterworths, 2002, p.50 and p.123