When does a bank appoint a receiver instead of repossessing?

[Brendan Burgess]

I was told today about a case involving 3 separate residential investment properties worth about €300k each with mortgages of around €500k each on them.

The lender appointed a Receiver over the three properties and the Receiver sold them on. The mortgage holders didn't seem to have any chance to appeal against this in the court as the bank did not go to court.

My suspicion is that the owners were diverting the rent from the properties and the bank were legally and morally correct to appoint a receiver.

They were in default for around 18 months before the banks appointed the receiver. But the loan agreements seemed to give the lender the right to appoint a receiver as soon as the loan defaults.

How common is this on "ordinary" residential investment properties?

 

[dewdrop]

I am not a solicitor but from my time working in a bank in the past it was always understood that appointing a Receiver was the effective way in realising your security. Any other course tended to be costly and drawn out. This assumes that the security afforded allowed a bank to appoint a Receiver.