Where a debt is owed can a Landlord place property owned by the Tenant out of the reach of other creditors?
This is a question that we are asked on a fairly regular basis and whilst the facts of every case will inevitably be different there are a few questions and issues you can consider before deciding whether your solicitors can try and take action on your behalf to protect the debt, or whether there is simply nothing that can be done.
1. Are you in the position of a creditor(is there a debt already crystalised) or are you party to litigation in which you may or may not become a creditor following judgment and the making of an order in the claim. If you are simply a party to the legislation then the provisions of the insolvency legislation which apply to creditors where there is a risk of dissipation of assets are not available.
2. Is there any evidence that your tenant is likely to dissipate their assets prior to judgment. Previous fraudulent dealings of the Tenant may not be considered directly relevant to any relief which it might grant.
3. Are you, or may it be considered that, you are looking for security for costs against your tenant prior to obtaining a judgment. This remedy is only available to a defendant so would only be available (if at all) if the Tenant was to bring a counterclaim.
4. You could consider registering a unilateral notice against the Property at the Land Registry seeking to protect your “interest”. Although whether the notice is valid would depend on whether the Landlord had any interest in the specific Property and not simply a debt that has not yet crystalised.
5. A freezing (Mareva) injunction limited to your Tenant's interest in the Property could be considered. However courts are reluctant to grant freezing injunctions unless there any evidence that your tenant is likely to dissipate their assets prior to judgment.
6. Consider an application for an order for the preservation of the relevant property being the Tenant's share of the Property or the sale proceeds thereof. The “relevant” property, should be property which is the subject of the claim for the debt, so consideration should be given to this.
Posted on 05/10/2018 by Ortolan
