The Home Owner and Debtor Protection (Scotland) Act 2010
18 March 2010

The Home Owner and Debtor Protection (Scotland) Act 2010 received Royal Assent on 18 March 2010. This Act had a remarkably quick passage through parliament and was intended to bring further protection to home owners who were at risk of losing their home. It had broad political support in view of the economic circumstances prevailing at the time of it's introduction and still continuing. The Act will come into force on a date to be set by Ministers. The main points of the Act are as follows:-

Pre-action Requirements

Heritable creditors must have complied with statutory pre-action requirements before raising court action for recovery of residential property subject to a heritable security. These are briefly

  • Provide clear information about the terms of the security and amounts due
  • Make reasonable efforts to agree proposals with the debtor for future payments
  • Refrain from taking court action if payments by the debtor are likely to settle the sums due within a reasonable time
  • Provide information about sources of advice and assistance
  • Encourage debtors to contact their local authority

We suspect most heritable creditors complied with most if not all of these requirements so it remains to be seen if these provisions have any significant impact on creditors.

Repossession Actions to be raised as Summary Applications

Where any part of the secured property is used for residential purposes, any action for recovery must be raised by way of a Summary Application. Summary Application procedure differs from Ordinary actions in that a date is set for the case to call in court. The result is clearly that all residential repossession actions will call in court whether opposed or not. This will differ significantly from current procedures where many cases proceed to decree without the necessity of calling in court. This will clearly impose a further burden on the court with more cases actually calling. For creditors it does entail extra expense in having a solicitor attend court for each case. It may well have a knock on effect on other court actions if the courts have to set aside further time for these hearings. All other court business could accordingly also be subject to delays.

Rights of Entitled Residents

Entitled residents can apply to the court to have repossession proceedings continued. Entitled residents include spouses, civil partners, and parties residing together as husband and wife as civil partners. That entitlement remains for up to 6 months after the debtor has left the secured home if it is the residence of children of the relationship under 16

Recall of Decree

Provision has been made for decrees of repossession to be recalled. Details of the procedure will follow in regulations. This could clearly present practical difficulties for heritable creditors if debtors use this right shortly before arranged evictions.

Lay Representation

Provision has been made for debtors in repossession actioned to have lay representation. Regulations will provide for who or what bodies can provide lay representation. We await the regulations with interest as this could well impact on the running of the courts.

Certificates of Sequestration

A new ground of sequestration is being provided where an "authorised person" grants a certificate of sequestration. Scottish Ministers have the power to define who an authorised person is and what fees they can charge. The details of this will again be in regulations and accordingly it is difficult to comment on this provision at this time.

Debtor's homes in sequestration

Previously a sheriff could sist the sale of a debtor's house for 12 months where a sale was sought by the trustee. That period has been extended to three years.

As detailed above much of the practical application of the Act requires the publication of regulation and as yet none of the Act is in force. Further postings will be made when the Act comes into force and the workings of the Act are clearer.