Discovering that your bridging lender has appointed a Law of Property Act (LPA) or fixed charge receiver is one of the most critical moments in a property development or investment project. Bridging loans are designed as short-term, fast-liquidity options. However, their high interest rates and rigid maturity dates mean that if an exit strategy fails, default happens quickly. <\/p>\n\n\n\n
Unlike traditional mortgage providers, bridging lenders rarely wait months to negotiate. They routinely use contractual powers to bypass courts entirely, appointing independent receivers to take control of, manage, and sell the secured property. <\/p>\n\n\n\n
If you are a borrower facing this situation, your immediate question is simple: Can I stop them? <\/p>\n\n\n\n
To successfully challenge a receiver, you must first understand the legal mechanism behind their appointment. Under Section 101 of the Law of Property Act 1925<\/a>, a lender gains the statutory power to appoint a receiver the moment the mortgage money becomes due. Bridging loan agreements\u00a0usually\u00a0expand these statutory powers through express\u00a0contractual clauses.\u00a0<\/p>\n\n\n\n A unique aspect of an LPA or fixed charge receiver is their legal status. In almost all bridging deeds, the receiver is contractually designated as the agent of the borrower, not the lender. This structure provides distinct advantages to the lender: <\/p>\n\n\n\n The most direct way to stop a receiver is to prove that their appointment was legally invalid from the outset. Because receivership is a harsh remedy, lenders must follow strict legal procedures. Any procedural flaw can make the appointment void, rendering the receiver a trespasser on your property. <\/p>\n\n\n\n In circumstances where receivers are taking steps to sell your asset below market value, borrowers will often look into whether it is possible to apply to the High Court for an urgent interim injunction. <\/p>\n\n\n\n To secure an injunction, your legal team must satisfy the court on several fronts under the established American Cyanamid<\/em> principles: <\/p>\n\n\n\n Borrowers must note that courts are generally reluctant to stop a lender from enforcing their security unless the borrower pays the disputed sum into court. However, an injunction can be granted without this requirement if you can demonstrate fraud, a clear calculation error by the lender, or that the receiver is acting in bad faith. <\/p>\n\n\n\n Deploying the\u00a0Menon contra Pask<\/a><\/em>\u00a0Defence\u00a0for Homeowners\u00a0<\/p>\n\n\n\n If the bridging loan is secured against your personal residential home, or if you live inside the property as an owner-occupier, the landscape changes. <\/p>\n\n\n\n In the landmark case of Menon contra Pask<\/em>, the High Court clarified how receivers must handle occupying borrowers. <\/p>\n\n\n\n The court confirmed that while receivers have the legal right to bring possession claims against borrowers in their own names, individual residential borrowers can protect themselves using Section 36 of the Administration of Justice Act 1970.\u00a0<\/a><\/p>\n\n\n\n Under Section 36, a judge has the discretionary power to adjourn possession proceedings, or suspend an eviction order, if the borrower can show they can clear the arrears or redeem the loan within a “reasonable period.” <\/p>\n\n\n\n To successfully invoke this defence against a bridging receiver, you must present concrete, verifiable evidence to the judge, such as: <\/p>\n\n\n\n Bridging disputes rarely centre on the principal sum alone, they are frequently driven by the rapid accumulation of default interest, exit fees, and facility charges. If these costs make repayment impossible, you can attack the underlying debt structure. <\/p>\n\n\n\n Under Section 140A of the Consumer Credit Act 1974, courts have broad powers to rewrite loan agreements if they find the relationship between the lender and borrower is unfair. This protection can apply to commercial bridging loans if the borrower is an individual or partnership. Factors that trigger an unfair relationship include: <\/p>\n\n\n\n Following the Supreme Court ruling in Cavendish Square Holding BV v El Makdessi<\/em>, a default fee is unenforceable if it is extravagant, exorbitant, or lacks a legitimate commercial justification. If the default fees are stripped away, the default may be cured, invalidating the receivership. <\/p>\n\n\n\n Receivers move quickly. The moment they are appointed, they will contact your tenants, insurers, and estate agents to seize control of the asset’s income and management. Doing nothing increases the risk of the loss of your property. <\/p>\n\n\n\n To stop receivers, you must act within the first few days of appointment: <\/p>\n\n\n\n Senior Litigation Partner David Burns and <\/strong>Associate Solicitor, <\/strong>Ben Lewis have extensive experience acting on behalf of borrowers where lenders have appointed receivers. For enquiries on this topic, please contact David Burns via email d.burns@rfblegal.co.uk<\/a> or direct Dial 0207 467 5751 or Ben Lewis via email at B.Lewis@rfblegal.co.uk<\/a> o por tel\u00e9fono en el 0203 947 8892. <\/p>","protected":false},"author":12,"featured_media":9929,"parent":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[20],"tags":[81],"class_list":["post-9928","insight","type-insight","status-publish","format-standard","has-post-thumbnail","hentry","category-property-litigation","tag-litigation-team-dj"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\tThe Agency Paradox<\/strong> <\/h2>\n\n\n\n
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Challenging the Validity of the Appointment\u00a0<\/h2>\n\n\n\n
Common Procedural Flaws<\/strong> <\/h3>\n\n\n\n
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Using Court Injunctions to Stop a Sale <\/h2>\n\n\n\n
The Balance of Convenience<\/strong> <\/h3>\n\n\n\n
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The Financial Hurdle<\/strong> <\/h2>\n\n\n\n
The Ruling and Section 36 Protection<\/strong> <\/h2>\n\n\n\n
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Challenging Secret Fees and Unfair Relationships <\/h2>\n\n\n\n
Unfair Relationships (Consumer Credit Act 1974<\/a>)<\/strong>\u00a0<\/h3>\n\n\n\n
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Illegal Penalty Clauses<\/strong> <\/h3>\n\n\n\n
Steps to take when receivers are appointed <\/strong> <\/h2>\n\n\n\n
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Contact Us \u2013 Senior Litigation Partner David Burns and Solicitor Ben Lewis<\/strong> <\/h2>\n\n\n\n