When section 36 applies
Section 36 applies where the lender brings a court action claiming possession under a mortgage of land which "consists of or includes a dwelling-house". A dwelling-house includes any building or part of a building used as a dwelling, and business use of part of the premises (a shop or an office) does not stop it counting (section 39). So a house or a flat is covered, and so is a shop with the owner's home above it.
Purely commercial property, with no part of it used as a dwelling, is outside the protection.
What the court can do
If it appears that the borrower "is likely to be able within a reasonable period to pay any sums due under the mortgage" (or to put right any other breach of the mortgage), the court may adjourn the proceedings. When it makes a possession order, or at any time before the order is enforced, it may stay or suspend enforcement of the order, or postpone the date for giving up possession, for as long as it thinks reasonable (section 36(2)). It can attach conditions to any of these, such as paying off the arrears at a set amount each month (section 36(3)). The power is a discretion: the court may use it, and it does not have to.
Sums due means the arrears
Many mortgages say that if the borrower misses a payment, the whole loan becomes due at once. Read literally, that would make the sums due the entire debt, and few borrowers could ever qualify. Section 8 of the Administration of Justice Act 1973 deals with this. It applies where the borrower is entitled, or allowed, to pay the loan by instalments or otherwise to put off repaying it, but the mortgage also provides for earlier payment. The court may then treat as due "only such amounts as the mortgagor would have expected to be required to pay if there had been no such provision for earlier payment". In practice that means the missed instalments (the arrears), not the whole loan.
How long is a reasonable period?
In Cheltenham & Gloucester Building Society v Norgan (1996), the Court of Appeal held that the starting point is the whole of the remaining term of the mortgage. The court asks whether the arrears can be cleared over that time, on top of the normal payments.
A worked example
Kwame, a self-employed electrician, has a repayment mortgage on his house with 22 years left to run. A large client goes into insolvency owing him money, and he misses six monthly payments. He has since signed a long-term contract and can pay the normal instalment plus an extra amount each month, which would clear the arrears in four years. The lender goes to court for possession and argues that, under a clause in the mortgage, the whole loan became due when he defaulted, so he could never pay the sums due.
The lender's argument fails, because Kwame was entitled to pay by instalments and section 8 lets the court treat only the arrears as due. Four years is well within the 22 years left, so the court can adjourn the case, or make a possession order and suspend it on terms that he pays the instalment plus the extra amount each month.
Change the facts so that Kwame has no work and no realistic prospect of paying anything. Section 36 then gives him nothing, because he is not likely to be able to pay within any reasonable period. Without it, the court has little power to hold off a lender who is entitled to possession, so it will usually order possession.
The traps SQE1 questions set
- Section 36 gives the court a choice. Arrears alone do not force it to order possession. But the section does not let the court throw out the lender's claim either. It can only delay possession, for a period it thinks reasonable.
- The court may treat the sums due as the arrears only, not the whole loan, where the borrower is entitled, or allowed, to pay by instalments or otherwise to put off repaying the loan (section 8 of the 1973 Act).
- The reasonable period can be the rest of the mortgage term (Norgan), so do not assume a short fixed period of two or three years.
- The protection covers land that consists of or includes a home. Purely business premises are outside it.
- Under a legal mortgage, the lender's right to possession arises as soon as the mortgage is made, even without any default (Four-Maids v Dudley Marshall), unless the mortgage terms restrict it. Many home loans do restrict it to cases of default.
A borrower mortgages a building with a shop on the ground floor and the flat she lives in above it. She falls into arrears but is now likely to clear them within a reasonable period, and the lender sues for possession. Can the court use section 36 to adjourn or suspend?
Show the answer
Yes. Section 36 covers a mortgage of land which "consists of or includes a dwelling-house", and section 39 says business use of part of the premises does not stop them counting as a dwelling-house. The building includes her home, so the protection is available even though part of it is a shop.
Sources
- Administration of Justice Act 1970, ss.36 and 39
- Administration of Justice Act 1973, s.8
- Cheltenham & Gloucester Building Society v Norgan [1996] 1 WLR 343 (CA)
- Four-Maids Ltd v Dudley Marshall (Properties) Ltd [1957] Ch 317
- Horsham Properties Group Ltd v Clark [2008] EWHC 2327 (Ch)
Law as at 28 September 2026.