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redrose
Starting Member
United Kingdom
11 Posts |
 Posted - 25 April 2011 : 08:13:44
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When I went bankrupt in October 2010 I had a BTL property from which the Official Receiver took the rental income until the mortgage company had an LPA Receiver appointed. The property in is negative equity at the moment but the rental income exceeds the monthly mortgage cost.
What will ultimately happen to this property? I am ever likely to retain control and is it possible that the Official Receiver could put a charge on it.
For further information my husband and I jointly owned our home which was reposessed last year, we are now living in rented property.
I hope that someone can throw some light on this matter as I cannot afford to pay for advice and I am not sure what the best course of action is.
Thanks in advance. |
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Mike62
Starting Member
United Kingdom
31 Posts |
Posted - 25 April 2011 : 11:44:07
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Hi, we have EXACTLY the same situation with 3 properties, the LPA agent is using the difference between rent/mortgage to pay off arrears and then once the arrears are cleared they revert back to us.
If the property is secured, are you sure the OR is getting the rent or the LPA agent acting for the mortgage company?.
Mike. |
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Mike62
Starting Member
United Kingdom
31 Posts |
Posted - 25 April 2011 : 11:45:48
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| Sorry, didn't read it properly, I see you said the OR took the rent until IPA appointed, it should still revert back to you. |
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redrose
Starting Member
United Kingdom
11 Posts |
Posted - 25 April 2011 : 12:36:44
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Sorry should have said that I went bankrupt in Oct 2009 and was discharged in Oct 2010. All the arrears (only caused by the OR taking the rental income) are now paid off. I was told by the LPA Receiver that surplus income will now go towards the capital outstanding.
Mike 62 you said that your properties will revert to you once the arrears are cleared. Is it down to the invidual mortage company/ LPA Receiver to decide when/if it reverts to me or do I have any rights in this matter.
I would weloome other views - the mortgage company concerned is DB Mortgages and the LPA Receiver is Scanlons. |
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Mike62
Starting Member
United Kingdom
31 Posts |
Posted - 25 April 2011 : 20:58:29
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Hi, in our case, and I suspect most like it, the Mortgage company make the decision to allow you to take it back on. We managed the BTL's impeccably until our main business went bankrupt, so we see no issues in regaining them.
Obviously the Mortgage company have to pay a fee to the LPA monthly so that's another incentive for them to allow the reversion.
Mike. |
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redrose
Starting Member
United Kingdom
11 Posts |
Posted - 26 April 2011 : 06:56:23
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Hi Mike
Thanks for replying. Like you before our main business went bankrupt the BTL was never in arrears. I have another 6 months in my current tenancy and then hope to move into my BTL myself.
I will have to approach the mortgage company itself and ask the question. By posting here I was trying to arm myself with as much information as possible before that.
I hope all goes well with you.
Redrose
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debtinfo
forum expert
2826 Posts |
Posted - 26 April 2011 : 21:30:42
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| The one you really need to ask is the reciever, they hold your interest in the property |
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Mike62
Starting Member
United Kingdom
31 Posts |
Posted - 27 April 2011 : 15:21:39
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| Not if an LPA reciever has been appointed they don't. |
Edited by - Mike62 on 27 April 2011 15:22:00 |
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debtinfo
forum expert
2826 Posts |
Posted - 27 April 2011 : 19:47:30
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| yes they do, unless you or someone else buys the trustees interest they can hang onto it indefinitly, The LPA receiver is simply collected the rent on behalf of the mortgagee. The Mortgage retains their charge, the Trustee/OR gets what is left if the property is sold |
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Mike62
Starting Member
United Kingdom
31 Posts |
Posted - 27 April 2011 : 21:46:49
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Hmm, I wasn't aware of that. All of the information we have had from the LPA people, and the IP's clerk indicated that after our discharge it was ours when the arrears were clear. I think I'd better do some phoning around tomorrow.
Cheers, Mike. |
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debtinfo
forum expert
2826 Posts |
Posted - 27 April 2011 : 22:50:06
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| the only way that can happen is if the IP has taken some affirmative action to give you the property back, for instance if they disclaimed their interest, have they done anything like that, anything in writing to say that they are giving you the property back |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 28 April 2011 : 15:26:10
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Hi all,
as debtinfo indicated, in a solely owned tenanted property, the OR as trustee also has the BI and title, which is why when anyone who is bankrupt, and has solely owned tenanted properties, then the OR becomes the landlord as well, and will generally appoint their own agents to manage the property(collect rents etc) if there is a tenant in situ.
However, as the following extract from the technical manual indicates, solely owned tenanted properties will not vest back to the bankrupt after 3 years:
31.11.10 Tenanted property is not usually a family home
It is important to remember that a tenanted property is not normally a family home for the purposes of section 283A (see Chapter 33, paragraphs 33.6 and 33.7) and as such, it will not re-vest in the bankrupt after 3 years. It will remain in the bankruptcy estate until it is dealt with (see Part 3). Tenanted property encountered by the official receiver will normally fall into one of the four categories below:
a.Property purchased as an investment property with the help of a buy-to-let mortgage (see paragraph 31.11.36),
b.Property purchased as a home with the help of a residential mortgage, with the bankrupt having later obtained the consent of the mortgagee to let the property out (consent to let) (see paragraph 31.11.36),
c.Property purchased as a home with the help of a residential mortgage, with the bankrupt having later let the property out without the permission of the mortgagee (unauthorised tenancy) (see paragraphs 31.11.37 and 31.11.38), or
d.Property purchased as a home with the help of a residential mortgage, with the bankrupt having later taken on a ‘lodger’ whilst remaining in occupation (see paragraph 31.11.19).
In situations a. to c. the notice offering the bankrupt the option to purchase back the interest [note 8] which would normally be sent when the official receiver is trustee, should not be sent. Neither should the notice to the bankrupt and other interested parties informing them that the property falls under section 283A [note 9]. The exception to this would be where the tenant is a former spouse, civil partner, ex spouse or ex civil partner (see paragraph 31.11.12) The bankrupt should not be led to believe that he/she may be able to purchase the property back from the official receiver. See Part 3 for information on when it may be possible to sell back a solely owned tenanted property.
For information on situation d. see paragraph 31.11.11 below.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 28 April 2011 : 15:39:45
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Hi,
The exceptional circumstances referred to in my last post are attached here. Basically, if the property was originally purchased as a family home, but then let out as a short term measure then it may be possible, but note that ALL the provisio's need to be met:
31.11.194 Sale to bankrupt (exceptional circumstances)
In exceptional circumstances the official receiver may consider selling the legal interest back to the bankrupt. Provided all of the following grounds are met it may be possible:
1.Where the property was originally purchased as a home and was only let out on a temporary basis (e.g. whilst the bankrupt “got back on their feet”).
2.Where the property has no equity.
3.Where no income is being received as the tenant has left.
4.Where the property is available (as the tenant has left) and suitable for the bankrupt to live in.
5.Where the bankrupt does not currently have any permanent residence (e.g. is lodging with friends) and needs to find a home.
6.Where the bankrupt can afford the monthly mortgage loan payment and it is not excessive for a suitable home in that area.
7.The bankrupt has sought independent legal advice, see paragraph 31.11.195.
8.The mortgagee’s consent has been obtained, see paragraph 31.11.197.
If the tenant is still resident in the property, it is very unlikely to be practical as the property is not available for the bankrupt to move in to and he/she would not be able to afford the mortgage loan payments as well as their own accommodation costs.
None of this applies however to jointly owned tenanted properties, as the legal title cannot be seperated, unlike the BI.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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redrose
Starting Member
United Kingdom
11 Posts |
Posted - 29 April 2011 : 18:51:02
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Thank you Bigal for your detailed reply. Is there any time limit for the property to be dealt with?
From what you have said the outlook is not good. I am not allowed to live in it, I cannot buy the interest in it - I am just responsible for the negative equity element.
Has anyone else been in this situation?
Redrose |
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Bigal4787
forum expert
United Kingdom
641 Posts |
Posted - 30 April 2011 : 11:09:13
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Hi,
there is no real time limit for dealing with BTL properties, eventually the mortgagee will realise their security even if it results in a loss, but of course any shortfall /arrears will be unsecured liabilities claimed in bankruptcy.
The only way you could re-occupy is if the BTL was your original home, and was the only property being rented out, and it satisfied all the requirements as shown in the last post.
Big Al
Insolvency examiner with the Insolvency service from April 2008 - July 2010.
If you need help completing SOA's(statement of affairs) or PIQ's(preliminary information questionnaire) if you've been declared bankrupt, or anything else and you're within 30 miles or so of Warrington, then please contact me via my contact details in the expert page for futher details"
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BTL property
