Djabar Babai has gone from being heavily in debt to his mortgage lender to outright home owner in one fell swoop, thanks to a favourable ruling by Appeal Court judges. The decision has catapulted the unemployed, failed businessman from being virtually penniless into an extremely comfortable financial position, as the court awarded Babai his home of 16 years, despite owing ?165,000 for the property to Nat West.

Babai has not paid a penny in mortgage repayments since January 1993, but judges in the court of appeal decided that squatter's rights enable him to claim the property outright, after Nat West bank took too long in their attempts to enforce repossession. This decision means that the bank must now write off the mortgage on the property in Stockport, although they are considering an appeal to the House of Lords in a final last-ditch attempt to overturn the Court of Appeal ruling.

Nat West first made a formal demand to recover its outstanding debt in 1992, following which Babai agreed to repay his mortgage at the rate of ?40 per month. However, after making only a handful of payments, Nat West failed to take any further steps towards repossession. In the absence of any action by the bank Babai and his family continued to live in the house, without paying any further mortgage repayments.

Some seven years later, Babai wrote to Nat West's solicitors outlining his hopeless financial situation, and still Nat West did nothing. The court ruled that because action started in 1992 it was now ?time-barred? and ruled that the mortgage debt of ?165,000 be instantly wiped out, making ?squatters? Djabar Babai and wife Zinat outright owners of the property.

Nat West lawyers argued that by awarding the property to the Babais the court would encourage lenders to come down harder on those falling behind with mortgage payments, but the judge's dismissed that argument, saying that the bank failed to take appropriate action over 16 years, not a number of months.

This decision has some interesting implications, not least of which affect Babai and his credit worthiness. As he was declared bankrupt in 1994, that information will now have disappeared from his credit reports, and because the repossession action is now struck out by the high court that too will disappear from his credit file. So, with assets of over ?200,000 and no or minimal debt, Babai should be able to rebuild his extremely quickly, and maybe start a new business using his house as collateral.

His future certainly looks far brighter than it did one year ago. From being in an almost hopeless financial situation Babai now has the world at his feet, pending any decision from Nat West to make a final appeal to the House of Lords. Until the bank declares its intentions Babai will be no doubt be keeping his fingers crossed that his newly acquired property remains his!