The lender must take a number of steps before it can take possession of your home. The sooner you act in the process, the more likely it is that you can make a repayment arrangement.
| Lender's steps for taking your house | |
|---|---|
| Default (you missed a repayment) 🡫 | |
| Default notice under Section 88 of the credit law Note: You may get other default or late payment notices but the important default notice is the one that gives you at least 30 days to fix the default and has a Credit Form 12 or Credit Form 12A attached. 🡫 | |
| At least 30 days to pay the amount of the default and the usual repayment. 🡫 | |
| If the default and usual repayment are paid then the contract goes back to normal (the lender cannot commence legal action). 🡫 | |
| If not, the lender can make the whole loan repayable. 🡫 | |
| 🡫 Take possession of your home (without commencing court proceedings) to recover the whole debt. | 🡫 Statement of claim or summons served on you for the arrears and/or the whole debt and/or the possession of your home. These documents may have another document called ‘Notice to occupier’ on top. |
| 🡫 You have a fixed number of days (depending on the State or Territory you live in) from the date of service of the statement of claim/summons to file a defence or lodge your complaint with the free complaint resolution scheme, AFCA. | |
| 🡫 Lender applies for a writ (an order) to take possession of your home. | |
| 🡫 If you do nothing, or file a defence and lose, the lender gets a court judgment. | |
| 🡫 Letter telling you when the Sheriff will come to change your locks (e.g. Notice to vacate). | |
| 🡫 Sheriff comes to your home, evicts you and changes the locks. | |
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Steps you can take
It gets very hard to negotiate a repayment arrangement to save your home or even to get time to sell your home after the lender has obtained judgment. Take action before that if you possibly can. If there is a judgment, get legal advice. See Chapter 12: Getting a stay of an eviction from the court and Chapter 14: Useful contacts for more information.
Doesn’t the lender have to go to court to get possession of my home?
No, they do not have to go to court; but they do in almost every case. This is so they can get a Sheriff to make you leave and change the locks on your home.
If the property is vacant or undeveloped land, the lender may not go to court but they usually need to wait for the default notice to expire before they take possession of the property.
If your home is rented the lender may enter into possession and receive the rent without a court order. The lender can end the tenancy by getting an order of the Supreme Court.
If these situations apply to you, your matter is urgent and you need to act as soon as you have received a Credit Form 12 or Credit Form 12A default notice.