Liability for invalid appointment of LPA or fixed charge receiver


Published by a ½Û×ÓÊÓƵ Restructuring & Insolvency expert
Practice notes

Liability for invalid appointment of LPA or fixed charge receiver


Published by a ½Û×ÓÊÓƵ Restructuring & Insolvency expert

Practice notes
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Why an LPA/fixed charge receiver could be invalidly appointed

An LPA/fixed charge receiver can be invalidly appointed for two main reasons:

  1. •

    first, if there is some invalidity in the security documentation which prevents the mortgagee from exercising its remedies

  2. •

    second, where the security is valid but the mortgagee fails to follow the correct procedures to trigger the power to appoint or there is some invalidity in the actual appointment of the LPA/fixed charge receiver

Consequences of invalid appointment

The consequences of an invalid appointment are potentially significant. The LPA/fixed charge receiver will have no status or authority if the appointment is defective for either of the reasons mentioned above. If they hold themselves out to be a receiver and receive rent or sell property, they do so without authority and the mortgagor would have a claim against the LPA/fixed charge receiver and the mortgagee. See John Smith & Co (Edinburgh) v Hill.

The possible claims a mortgagor may have against an invalidly-appointed LPA/fixed charge receiver are:

  1. •

    trespass

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United Kingdom
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Key definition:
Authority definition
What does Authority mean?

The public sector body procuring the project. This might, for example, be a local authority, an NHS trust, a central Government Department or a Non-Departmental Public Body.

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