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a bankruptcy/insolvency claim on it.
Our solicitor has just found out why our property purchase is taking so long, the vendors solicitors who have been an sh*tshow in communications, or complete lack of. They've had the case since beginning of July but stopped as there was a pending land registry application on it, they didn't know what to do so left it...then went on holiday.
According to land registry there has been a bankruptcy claim on the property since 2015. We are presuming what ever debt is held over the property (Caboot Inc) was being paid off but has since stalled perhaps due to covid or furloughs on the vendors behalf, the property is currently being rented to tenants who have had their notice served, and then extended which for us went against our agreement on the conditional sale (agreed by all partners and suggested by our solicitor). Obviously before we found out about the above bankruptcy.
Has anyone ever bought a house with a bankruptcy claim over it? As I understand it if the purchase price does not meet the amount of debt then the claim can still be over the house until its paid up. Even if the debt is paid in full, the claim has to be removed by the courts at a request of the debtor only, not the new owner of the property. Even so, if the claim is still on the property, the house is blacklisted for credit, joining electoral payrolls and a ton of other stuff.
Any experience here would be grand as the Mrs is pulling her hair out as its going to affect our first born starting school with the delays.
Also, hunting for other houses is restricted due to relocating 182 miles away, both working full time and juggling 2 kids.
As I understand it if the purchase price does not meet the amount of debt then the claim can still be over the house until its paid up.
No direct experience, but the house would form part of the bankrupt's estate. I'm struggling to see how if sold there could be any other claim over it - the asset would be sold to repay some of the bankruptcy debts.
The bankruptcy claim would be in relation to the funds after sale - it's a charge on the asset, and the funds would be applied to pay down the bankruptcy debts.
If there's monies still owing, it's the bankrupt who owes them, not the subsequent purchaser of the property.
I'd be asking your solicitor pretty strong questions about why they hadn't spotted it and raised it with you when they first got the office copies. I'd also be asking them to clarify the above position - I don't *think* that's right but land law can be pretty arcane at the best of times...
I went bankrupt 12 years ago - I can't help with the specifics of buying a house but the debt is with the person who is bankrupt.
Is it the tenants who are bankrupt or the property owner?
If it's the property owner, the property will be sold to recover as much money as possible. If the property was sold and paid all the debt then technically the person ain't bankrupt!
If it's the tenants then the bankruptcy should follow them to their new address.
My advice would be to find the name of the person who is bankrupt and phone the official receivers office who is dealing with it.
I’d be asking your solicitor pretty strong questions about why they hadn’t spotted it and raised it with you when they first got the office copies
They still haven't received the solicitors pack from the vendors solicitors, hence their own digging into it and the poor comms from them.
I can’t help with the specifics of buying a house but the debt is with the person who is bankrupt
Sorry to hear that, this seems to be one of the points of controversy between what we've read online and what people are saying. One example was if the vendor had taken a business loan out against the house as collateral...IANAL and the legal wording just span me in circles but the gist was the claim, not the debt stayed on the house, thus blacklisting it as its still on the land registry details and easily visible.
Is it the tenants who are bankrupt or the property owner?
The claim is in the vendors name on the property.
My advice would be to find the name of the person who is bankrupt and phone the official receivers office who is dealing with it
I wanted to do this but the Mrs said to just let the solicitors handle everything legal, I have a habit of interfering as I'm super impatient and things just take too long for my liking. Pick up the phone, get it done. But I'm banned.
The house is just an asset like any other asset. Once it's sold and the money is with the receiver it's done with. Never heard of a property black-list.
If in doubt phone the Official Receiver - they know and they are helpful - it won't be hard to find the details as there will be a public notice about it. There's no harm in calling as solicitors can take a ruddy age with stuff like this.
A person goes bankrupt, not a property.
My wife wasn't bankrupt and still had a good credit rating and was still able to get car finance etc.
Ask here too - there are some very knowledgeable people on this forum...
https://forums.moneysavingexpert.com/categories/bankruptcy-living-with-it
They still haven’t received the solicitors pack from the vendors solicitors, hence their own digging into it and the poor comms from them.
They should still have obtained the title register from the LR and checked it for any adverse isses - that is, after all, what you are paying them for.
They should still have obtained the title register from the LR and checked it for any adverse isses – that is, after all, what you are paying them for.
We are going back a bit now but when I worked in conveyancing, yes it was down to the purchasing solicitor, however the bankruptcy searches were the very last thing to be done. No idea why - just 'the protocol' at the time.
We are going back a bit now but when I worked in conveyancing, yes it was down to the purchasing solicitor, however the bankruptcy searches were the very last thing to be done. No idea why – just ‘the protocol’ at the time.
You're right, but I think you are conflating two separate things. I was talking about copies of the title register to the property which would show any charges etc, usually one of the first things the buyer's solicitor obtains from the LR. If they've been charged against the property since 2015 they should have been on the title register and immediately apparent on receipt of the title register.
The bankruptcy searches relate to the buyers and sellers and are checks made just before completion to ensure that neither party has been made bankrupt in the meantime. The LR issues a certificate which is valid for a short period of time, hence leaving it just before completion.
Apart from the red flag of the bankruptcy, I would also be concerned with the house having tenants still in. If they refuse to move out you could be waiting months for a court eviction order (and most housing charities will advise tenants to wait for this as without it the local authority can claim that they are intentionally homeless, and thus at the bottom of the list for council housing). And if the tenants are difficult they can also trash the place - my parents last tenants stripped eveything out - electrics, plumbing, kitchen cabinets, internal/external doors etc, - and left water flowing thorugh the place from the tank in the loft (that they took) - luckily covered by insurance, but lots of work hassle and the cost ran into tens of thousands.