The following Restructuring & Insolvency guidance note Produced in partnership with John Hughes of Shakespeare Martineau LLP provides comprehensive and up to date legal information covering:
The Law of Property Act 1925 (LPA 1925) enables a mortgagee of a legal mortgage to appoint an LPA receiver:
when the mortgage moneys become due, and
after making a demand for payment under the terms of the mortgage
This right may alternatively (and more usually will) arise under the terms of the charge. In both cases the receiver may be referred to as a fixed charge receiver (in the latter case the receiver is not an LPA receiver, but in practice is often still referred to by this name).
There is no statutory provision that deals with the termination of an LPA/fixed charge receivership. As the power to appoint an LPA/fixed charge receiver derives from the legal charge, once the legal charge has been discharged the receiver’s role ceases and they have no more powers. However, a mortgagee can remove an LPA/fixed charge receiver and appoint a replacement by way of deed of appointment.
There is no statutory power to enable an LPA/fixed charge receiver to resign. If an LPA/fixed charge receiver wishes to resign, they must do so with the consent of the appointor mortgagee. If such consent is not forthcoming a receiver is faced with a dilemma. There does not seem to be any authority whereby an LPA/fixed charge
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