Inhibition: when a creditor stops you selling

An inhibition is a legal order that stops you selling your home or other property, transferring it to someone else, or borrowing against it, until the debt is paid. It does not let the creditor take or sell your home. An inhibition lasts 5 years, must come with a Debt Advice and Information Package, and is recorded on a public register.

What does an inhibition do?

An inhibition is a type of diligence (debt enforcement) that affects heritable property, which in Scots law means land and buildings, such as your home.

While it is in force, you cannot sell or transfer ownership of the property, or take out further loans secured on it, without the creditor’s debt being dealt with. The point is to stop the value in the property being used for anything else before the creditor is paid.

What it does not do:

• it does not give the creditor possession of your home
• it does not let the creditor sell your home
• it does not stop you living there

It is used for debts that are not your mortgage. If you are behind on a mortgage or other loan secured on your home, the lender has different powers.

What happens if I sell or borrow anyway?

You breach an inhibition if you sign a deed transferring the property, or granting someone else a right in it such as a new secured loan, to anyone other than the creditor who inhibited you. The creditor can challenge a transaction made in breach, so a buyer or lender is likely to want the inhibition dealt with before going ahead.

When can a creditor inhibit you?

An inhibition can be used:

• after a decree (a court order to pay) or another document that allows enforcement, to enforce a debt that is owed (inhibition in execution)
• during a court action, when a creditor asks the court for a warrant ‘on the dependence’ of the case, to stop you selling or borrowing against your home before the case is decided

When an inhibition is served on an individual to enforce a debt, it must come with a Debt Advice and Information Package, a booklet from the Accountant in Bankruptcy about your rights and where to get free advice. Citizens Advice Scotland says that if the creditor does not provide one, the inhibition is not valid.

An inhibition is recorded in the Register of Inhibitions, a public register kept by the Keeper of the Registers of Scotland. It generally takes effect from the day it is registered.

Having time to pay does not stop an inhibition. mygov.scot says a creditor can still apply for one even if you have a time to pay agreement.

How long does an inhibition last?

An inhibition stops having effect 5 years after the date it took effect. It can end sooner if it is paid off (see below). If the debt is still unpaid after 5 years, a creditor may be able to use diligence again, so it does not mean the debt has gone.

What should I do if I have been inhibited?

• Read the schedule of inhibition. Check which creditor and which debt it relates to, and the amount claimed.
• Check you received a Debt Advice and Information Package with it. If not, tell an adviser.
• Check the debt itself. Make sure it is yours and the figure is right. If the debt is very old, read about statute-barred debt in Scotland, although a debt covered by a court decree has a much longer time limit.
• Note the date it took effect, so you know when the 5 years end.
• Remember the other diligence. A creditor who can inhibit you may also be able to arrest your wages or bank account, so do not wait for that to happen before getting help.
• Tell your solicitor early if you are selling, remortgaging or transferring your home, including to a partner or family member.
• Keep paying your mortgage and other priority bills such as council tax, so the situation does not get worse.

How do I get an inhibition removed?

An inhibition to enforce a debt stops having effect when you pay:

1. the debt, including any interest due under the decree
2. the creditor’s expenses of the inhibition
3. the expenses of discharging (removing) the inhibition

If you are selling, you may be able to pay what is owed from the sale proceeds. Ask the creditor or their solicitor for the full figure, and get advice before you agree to it.

If you think the inhibition is invalid, for example because you did not receive a Debt Advice and Information Package, get advice about challenging it.

Can a debt solution help?

If you own property and have several debts, an inhibition is often a sign that you need to look at the bigger picture.

• Debt Arrangement Scheme (DAS): once a debt payment programme is approved, creditors cannot start or carry out diligence, including new inhibitions, for the debts in it. You do not have to sell your home in DAS. See the Debt Arrangement Scheme.
• Trust deed: homeowners may need to release equity, for example through a lump sum or extra payments. A trust deed has fees, affects your credit rating for 6 years and puts your name on the public Register of Insolvencies. Read about your home and a trust deed.
• Sequestration (bankruptcy) can put your home at risk, and informal plans are another route.

Tell any adviser about the inhibition and about everyone who owns the property with you. An adviser needs to look at your full situation before you choose an option.

If a lender or collector threatens an inhibition

Firms regulated by the Financial Conduct Authority must not threaten court action, including an inhibition, to pressure you into paying more than you can reasonably afford. If that happens, you can complain (see debt collectors in Scotland).

Official sources

• Bankruptcy and Diligence etc. (Scotland) Act 2007, Part 5 (inhibition)
• Conveyancing (Scotland) Act 1924, section 44 (inhibitions last five years)
• mygov.scot: sheriff court decrees on debt
• Citizens Advice Scotland: can my house and possessions be sold to pay my debts?
• FCA Handbook, CONC 7.3 (treatment of customers in arrears)