LPA RECEIVERS: "THE BASICS" BLOG
Posted: 29/09/2015 14:40
Good morning to all our blog readers and thank you for tuning in.
We hope to provide an informative insight into the world of insolvency for all with weekly blog posts concerning different aspects.
This week we shall be looking at Law of Property Act 1925 Receivers or as they are more commonly known, "LPA Receivers".
An LPA receiver is a receiver appointed under a mortgage or legal charge.
An LPA Receiver does not need to be a Licensed Insolvency Practitioner. There is a voluntary licensing arrangement in the form of the Fixed Charge Receivership Scheme. The voluntary licensing agreement is backed by several Governing Bodies; the Royal Institution of Chartered Surveyors (RICS) and the Insolvency Practitioners Association (IPA).
Chris Parkman of Purnells has applied to become a member of NARA and hopefully become the only NARA registered LPA Receiver in Cornwall. Chris is now awaiting his peer interview, which is the final hurdle in becoming a NARA LPA Receiver.
So, what is the point of LPA Receivers?
The main reason an LPA Receiver would be appointed is to take control and sell the mortgaged property following a period of non-payment of the mortgage.
Obviously all situations are different and mortgage documents can give different powers to LPA Receivers, however the five common powers/duties given to LPA Receivers are:
1. To collect rent,
2. To pay disbursements, and
3. To insure the mortgaged property.
4. Sell the property.
5. To repay the appointing charge holder.
An advantage of appointing an LPA Receiver is that it will alleviate the burden on the lender of managing and marketing the property and therefore reduce any potential claim against them.
A disadvantage of appointing an LPA Receiver could be that their powers are somewhat restricted and there may be better alternatives available. For example, if the client of the lender is a Company and the lender holds a floating charge, it may be more efficient for the Company to be placed into Administration.
Administration is not always the chosen route because of the additional cost, despite the Administrator having significant more powers than an LPA receiver. While not always possible Purnells are usually more than happy to undertake an Administration as opposed to acting as an LPA Receiver for the same cost. However, this is completely down to case circumstance and would need to be thoroughly reviewed prior to any action being taken by the lender.
I hope you have found this blog useful/informative. If you have any requests for Blog topics I would be happy to try my best to incorporate them into the upcoming schedule.