WHAT IS A "LPA RECEIVER"? AND WHAT ARE THEIR POWERS?

Definition

The name LPA Receiver is the shortened version of “Law of Property Act 1925 Receiver”. The LPA Receiver is a person (or company) who is appointed to take charge of a mortgaged property when the borrower has defaulted. The main aim is to either sell the property or to collect a rental income for the lender. They are commonly used when property developers fail when their borrowings will largely be secured on specific properties.


Extent of the LPA Receivers powers


The only direct powers that the LPA Receiver has under Section 109 of the Law and Property Act 1925 are:-

• To demand and recover all income due (including rent) on the property that they are appointed receiver on. This can be recovered by action, distress or any other means needs. They are required to provide valid receipts for income (or other) taken.
• If directed by the mortgage lender the receiver can insure and keep insured against loss or damage by fire. This can be taken by from money received by the receiver and can be used against anything compromised in the mortgage.

Delegated Powers


If desired the lender can also delegate its contractual powers to the receiver; this is under section 109(3) of the Law and Property Act 1925. If the lender wishes to delegate its contractual powers this must be done in writing. The contractual powers generally are:-


• The power to sell the mortgaged property on such terms as the receiver sees fit
• When the lender is in possession of a property it has the power to cut and sell timber and other trees after consulting with a qualified arboricultarist.
• The power to make leases

Contractual Powers


An LPA Receiver’s powers are limited to section 109 and 109(3) of the Law and Property Act 1925.

Application to court for directions


The LPA Receiver or mortgage lender may apply to the court on matters of uncertainty about the appointment, powers or remuneration of the receiver.


Application of insurance money

The lender can require that all monies received in connection with insurance of the mortgaged property be applied as follows:-

• Towards the discharge of the mortgage money owed.

• To recoup monies, loss or damage to which the funds are for.

Remuneration for the LPA Receiver

The receiver is entitled to retain out of any monies received (after discounting costs) a rate not exceeding 5% unless specified otherwise. If an application to the court has been made, they can also specify the rate of remuneration dependant on the individual case.