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Tony.b.
Starting Member
United Kingdom
4 Posts |
 Posted - 03 April 2012 : 10:34:49
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I was made bankrupt on 11/11/2005. The Joint Trustees obtained a Court order for the sale of the property on 13/11/2008.
I have always expressed the intention to buy their beneficial interest, but have not been able to agree a price.
The situation is still unresolved.
Does Section 283A of the Insolvency Act apply in my situation? |
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mydebtpages
Starting Member
43 Posts |
Posted - 03 April 2012 : 14:54:41
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Hi Tony
283A would apply only if the property was your home or that of your spouse/civil partner or former spouse/civil partner.
Regards
- MyDebtPages |
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Tony.b.
Starting Member
United Kingdom
4 Posts |
Posted - 03 April 2012 : 15:43:03
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Sorry I should have been more specific.
Yes, the property in question is my only home. Owned jointly between myself and my wife.
JT had a valuation done in December 2008, valuing it £220,000.- Mortgage and other charges total about £207,700 at the time. JT wanted £5,000 for the 50% share. |
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mydebtpages
Starting Member
43 Posts |
Posted - 03 April 2012 : 16:40:04
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Hi Tony,
Under the provisions of 238A which I am assuming were in force on the date of your bankruptcy the trustee had until, say, 12/11/2008 at the latest to deal with the equity.
If they had not, the implication is that it should have reverted to you. Your shortest route might be to follow it up with them. It's possible they could have done something that wasn't immediately obvious, like applying for a Charging Order, though I can't believe they wouldn't have mentioned it.
Regards
- MyDebtPages |
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debtinfo
forum expert
2826 Posts |
Posted - 03 April 2012 : 18:10:38
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hi mydebtpages, the trustee simply has to make the application to take action (like in this case detting an order of sale) by the 3 year point, they dont have to have finished dealing with the interest in the property.
Mt question though and maybe someone else may have an answer is if there is a limitation once the order of sale has been obtained on the sale proceeding before the benefit of that order is lost as 4 years seems a long time |
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Tony.b.
Starting Member
United Kingdom
4 Posts |
Posted - 03 April 2012 : 18:30:17
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The JT now said they have done another valuation in November 2011. This put the value at £235,000.- on this basis, they now want £15,000 for their Beneficial Interest.
Actually, statistics kept by Land Registry shown the house prices as exactly the same between end-2008 and end-2011. How can they just re-value the price?
The spirit of Section 238A is to prevent Trustees from sitting on their interest and wait for the property market to improve to cash in on their interest.
The other question is how should the Trustees work out the value of their BI. Should they consider the expenses incurred if they possess the house and then sell it on the open market? |
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Tony.b.
Starting Member
United Kingdom
4 Posts |
Posted - 04 April 2012 : 10:42:01
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I have been reading on the internet and found the following comments in respect of the Insolvency Act 1986, s 283A
Court of Appeal has provided clarification of the ‘use it or lose it’ provisions in Lewis v Metropolitan Property Realisations Ltd [2009] EWCA Civ 448, [2010] 1 FLR 86
WHAT A TRUSTEE IN BANKRUPTCY CAN DO
Laws LJ summarised the scheme of the relevant parts of s 283A (assuming a jointly owned home) as follows:
The section only applies to that part of the bankrupt’s estate#8195;‘(i) comprising his or his spouse/civil partner’s dwelling-house. It does not apply to other property.
The trustee has 3 years to decide where the estate has such an#8195;(ii) interest.
If he does nothing, then (subject to subs (6) which presumably allow#8195;(iii) for special cases which we do not consider further) the estate loses the property interest.
[Laws LJ sets out the provisions for low value interest ie not more#8195;(iv) than £1000]
If the interest is of significant value [ie more than £1000], the#8195;(v) trustee can do the following:
Apply for an order for sale. This keeps the interest out of the scope of#8195;(a) s.283A while the proceedings are alive and gives the co-owner the opportunity to buy the trustee out at the then value. Alternatively the property will be ordered to be sold and the trustee gets the then value.
Apply for a charging order (if the conditions of s. 313 are fulfilled).#8195;(b) This secures the then value to the trustee, with future increases going to the bankrupt.
Reach an agreement with the bankrupt under subs (3)(e) – in effect, sell#8195;(c) to the bankrupt. That will obviously reflect the then value and secure future increases for the bankrupt.
Sell the interest to someone other than the bankrupt or the civil#8195;(vi) partner/spouse at a price payable and paid on sale . . .It would be a sale at the then value, with future increases accruing to the purchaser.
It should not be forgotten that he might agree with the co-owner to#8195;(vii) sell, or the co-owner might want to sell anyway, in which case the trustee gets the estate’s interest at its then value.’
The effect of these provisions is to prevent trustees in bankruptcy obtaining any share in the future profits from the sale of the property. The trustee must act within 3 years, and will only obtain the value of the bankrupt’s interest at the time of acting.
This would indicate that the Trustees cannot benefit from any future increases in value of the Asset. The value should be based at the time of the order. |
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mydebtpages
Starting Member
43 Posts |
Posted - 08 April 2012 : 17:10:54
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Hi Tony
quote:
The spirit of Section 238A is to prevent Trustees from sitting on their interest and wait for the property market to improve to cash in on their interest.
I think you are right.
You need to find out on exactly what basis the trustee thinks they still have a legal interest in the property.
It is possible they could have made an application within the three year deadline. They could have applied for an Order for Sale as debtinfo suggests above or they could have applied for a Charging Order as I suggested but there is only a limited number of things they can do and I can't believe you wouldn't have heard about it by now.
I don't think you're going to get much further until you know what's going on. Getting some sound legal advice might be a good way to go.
Regards
- MyDebtPages
PS.
With regard to the second part of debtinfo's post above, debtinfo you might like to have a look at the court report for the cited case which states that applying for an Order for Sale
'keeps the interest out of the scope of#8195;(a) s.283A while the proceedings are alive and gives the co-owner the opportunity to buy the trustee out at the then value. Alternatively the property will be ordered to be sold and the trustee gets the then value'
This suggests that once an Order for Sale has been applied for it can be pursued for as long as is required, but I imagine the actual timetable is set by the Courts. The part about 'gives the co-owner the opportunity to buy the trustee out at the then value' is interesting, but it seems a bit far-fetched to suggest that the trustee would go to the trouble of applying for an Order for Sale which he was then able to put on hold as a cover while carrying out protracted negotiations to sell the interest back to the bankrupt.
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Edited by - mydebtpages on 08 April 2012 17:35:10 |
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Section 283A of the Insolvency Act
