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racheldbromley
Starting Member
5 Posts |
 Posted - 14 January 2010 : 23:00:58
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| My partner has just been made bankrupt he lives with me but our finances are completely seperate, he has his own property with a mortgage on this which is rented out and the rent pays the mortgage on that, the offical receiver wants to take the rent to pay the debts of, is this really right, how is he supposed to pay his mortgage now??? He does work but only earns very small his income including his rent is £1850 his outgoings are £2057 including his mortgage payment, he will be in a terrible state if the offical receiver takes the rent, please help??? |
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debtinfo
forum expert
2826 Posts |
Posted - 14 January 2010 : 23:12:17
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This is correct, the OR can take the rent, and will not pay the mortgage, The property will probably be repossessed. Is their any equity in the property.
Sorry i cant give better news |
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Steve Thatcher
New Member
United Kingdom
70 Posts |
Posted - 15 January 2010 : 12:59:00
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Debtinfo is right.
Below is the guidelines that the OR works from.
There are legal hurdles that the OR will bear in mind but essentially the rent will be taken for the estate, the property will probably then be re-possessed and any shortfall on realisation included as a debt in the bankruptcy.
"Before taking steps to collect rent the official receiver needs to consider:
(a) The nature of the occupation of the property by the lessee or tenant;
(b) Whether the insolvent’s interest in the property is likely to result in any equity for the benefit of the estate;
(c) The extent of the landlord’s obligations under the lease or tenancy e.g. for insurance of the property or repairs to it; and
(d) Whether the property is subject to a mortgage.
The official receiver should collect the rent even if the party occupying the property was occupying it without the knowledge of the mortgagee, but the official receiver must be certain that collection of rent will not give rise to a tenancy that did not otherwise exist. The official receiver should not be prevented from collecting the rent purely because the insolvent had used rent collected to pay the mortgagee prior to the insolvency order. If a mortgagee later enters into possession of the property or appoints a receiver, the mortgagee will be entitled to all unpaid rent even if the official receiver has attempted to collect that rent. Any rent already collected by the official receiver should not be remitted to the mortgagee but should be retained by the official receiver for distribution in the prescribed order of payment, the rent being treated as part of the insolvency estate"
Steve Thatcher
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Housing
Senior Member
United Kingdom
1399 Posts |
Posted - 15 January 2010 : 13:12:42
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Hi Rachel,
I have seen the responses made so far - have been out this morniong, otherwise would have posted along the same lines as well
There are people who have managed to save a BTL in bankruptcy - I am one. However, my situation is almost unique.
On reflection, I cannot give any solution to this situation, save for the comments entered below and they are for a thought process only at this stage:
Is the ownership in your partners sole name or is it owned as joint tenants?
If yes to the joint ownership, is that you and is your interest 50%
Is there any equity?
Is the BTL tenanted?
Are there any arrears (up to the BR and the OR taking his action)?
Does the tenant (if any) know of the implications?
If there is a tenant, I assume they are on an AST - has it come to the end of its term and therefore now a periodic tenancy?
I am not sure if any of these questions will lead me (or any other expert) to a solution for you and your partner
Post back to see if there any angles worth exploration. Regards, Richard
"Life is generally something that happens elsewhere" (Alan Bennett - author and hero of mine!!) |
Edited by - Housing on 15 January 2010 13:17:53 |
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racheldbromley
Starting Member
5 Posts |
Posted - 15 January 2010 : 15:23:38
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Hi there,
Thankyou for all the quick responses.
The flat is in his name solely, we both had our properties before getting together.
When the tenancy finishes in a couple of months, will that be the end of the payments and can he then look at purchasing the beneficial interest if we can find a way to pay the mortgage in the meantime.
I am worried that if we do that and then find more tenants they can take that money also.
The other question is is job is on a temp contract, if he looses that will he just have to life from any job seekers benefit or in that circumstance will the receiver have to give an allowance from the rent to live from?
Thanks again
PS - there are no arrears or late payments on the mortgage at all, but the mortgage company are not aware of the tenants either at present as on a normal mortgage
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racheldbromley
Starting Member
5 Posts |
Posted - 15 January 2010 : 15:24:52
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sorry just saw another couple of questions
No equity - about £5k negative at the moment and the tenants are not aware of the situation, we wasn't sure if we should / have to tell them or it may be worse in doing so as they could worry unnecessarily
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Housing
Senior Member
United Kingdom
1399 Posts |
Posted - 15 January 2010 : 15:46:36
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hello again Rachel,
Thank you for the additional info.
A number of points to think about.
As it is a residential mortgage, strictly speaking, the terms of the mortgage have been breached. Not the end of the world as there will probably be a clause somewher that says that in the event of you subletting the property approval must be sought in advance and that such approval will not unreasonably be withheld. However, depending on the lender thay may seek to vary the interest rate.
Is the tenant on a six month contract or 12 month fixed term AST? If so (either period) have the tenants said they want to stay beyond that fixed term? They will still be ASTs but they will become periodic tenants - nothing to worry about. Does not give them any extra rights.
The negative equity is something to look at for buying the BI - but, only if your partner can afford the mortgage.
Does he ahve another property or is he renting where you are now?
If he loses his job with the tenant in situ, he will not get any assistance for the mortgage from the DWP, but, if he is ynemployed for more than 13 weeks on JSA or ESA benefits AND is living in the property as his principal home he will get the interest paid up to a maximum of £200K
Not sure if that assists - some of the experts or other posters may wish to add to what I have said.
Again, as always come back with more info or questions as you see necessary - someone here will be able to give an answer, Richard
"Life is generally something that happens elsewhere" (Alan Bennett - author and hero of mine!!) |
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My partner has just been made bankrupt
