Barrett v Halifax Building Society (1996) 28 HLR 634
Sale of property ordered where borrowers in negative equity
Facts
A possession order granted to the respondents over the applicant’s home was suspended to allow the applicants time to find a purchaser for the property. The applicants found buyers for the property, but the respondents were not amenable to the proposed sale as the applicants were in negative equity. The applicants applied for an order directing the sale of the property under section 91(2) of the Law of Property Act 1925.
Issues
The applicants contended that the order for the sale of the property should be granted because if the respondents were to take over the sale, then there would be further delay before the sale could be completed. They also provided expert evidence, which demonstrated that a lower price is usually obtained where a property is sold after repossession by a lender.
Decision/Outcome
Section 91(2) gives the Court the discretionary power, at the instance of the borrower, to order the sale of mortgaged property against the wishes of the lender if justice requires it. The only reason advanced by the respondent lender as to why the proposed sale should not proceed in this case, was that it would break with their established policy not to permit borrowers in negative equity to conduct the sale of their own property. The Court did not consider this to be a valid consideration, which should be taken into account in deciding whether or not to order the sale of the property. Accordingly, the Court made the order as requested by the applicants.
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Updated 19 March 2026
This case summary remains accurate. Barrett v Halifax Building Society (1996) 28 HLR 634 is a valid and reported authority, and the legal principle it establishes — that a court may exercise its discretion under section 91(2) of the Law of Property Act 1925 to order a sale of mortgaged property at a borrower’s request, even against the lender’s wishes, where justice so requires — continues to represent good law. Section 91(2) of the Law of Property Act 1925 remains in force in its original form and has not been materially amended. The Barrett decision has been followed and applied in subsequent cases, most notably in Palk v Mortgage Services Funding plc [1993] Ch 330 (which predates Barrett but established the foundational approach) and in later county court and High Court decisions involving negative equity situations. Readers should note that while the discretion under section 91(2) is well established, courts will weigh all relevant circumstances, and the outcome in any given case will depend on its particular facts.
