A lender can issue a calling up notice if the debtor fails to keep up with the mortgage payments. Basically the notice ends the agreement and asks the debtor for repayment of the principal sum, plus arrears, interest and expenses within two months. If the debtor fails to comply with the calling up notice the creditor can exercise their rights which include, entering into possession, selling or letting the subjects. The creditor also has to serve a Section 11 notice on the debtor’s local council which states that the creditor intends to repossess the property and the debtor may become homeless.

Recently there have been two very important court decisions involving when and how a calling up notice should be served:

1.  On 24/11/10 the UK Supreme Court decided that lenders must serve a calling up notice otherwise the action will be incompetent. (A decision from the Supreme Court binds all courts below it).

2.  On 26/07/11 at Edinburgh Sheriff Court in the case of Santander V David Gallagher it was held that when a lender uses sheriff officers to serve a calling up notice then they must physically give the calling up notice to the borrower. (To comply with S.19 (6) of 1970 Act) It is not enough to check that the person lives there and then leave at the house-as often happens. The full case can be viewed by going the Scottish Court Website.

A calling up notice ceases to have effect after five years from the date of the notice.