Property / residential property help

Lalaland27 · 19 February 2017 at 1:38PM

Hi,

When made bankrupt I owned a mortgaged property in negative equity. We had been renting it but had given notice to move back in. The property was treated initially as a residential property. In answering some basic query via email with the OR we received a reply which stated that as we weren't living in the house when the order was made it isn't classed as a residential property. I can't find that letter but will be able to with a full search.

I have read the relevant legislation & the bankrupt doesn't actually have to live in the property for it to fall within the act & be subject to the 3 year provisions.

Anyone dealt with a similar issue or know where best to get advice. My 1 year bankrupt & 2 additional years is almost up & I need to get this sorted!

Thanks

debt_doctor · 19 February 2017 at 2:08PM

Hi,

My view is that the property must have been the sole/main residence of the bankrupt and / or their spouse / civil partner on the day the bankruptcy order was made.

31.3.71 Properties to which the provisions apply (a ‘qualifying property’)
Where a property is considered to be a dwelling house (see paragraph 31.3.75), which at the date of the bankruptcy order was the sole or principle residence of URL="https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch25-36/Chapter31/part3/part3/part%203%20notes.htm#3"][COLOR=#0066cc]note 3[/COLOR][/URL;

the bankrupt,
the bankrupt’s spouse or civil partner (see paragraph 31.3.78), or
a former spouse or civil partner of the bankrupt

It will be considered to be a qualifying family home. Such a property will be referred to as ‘the family home’ for the purposes of this Part.

DD

Lalaland27 · 19 February 2017 at 6:27PM

Thank you for your reply.

I suppose my next question is twofold...

1. If it was originally listed / treated as a residential property by the OR can this be changed after discharge?

2. If it can be changed & so we are stuck with this - will we ever be able to regain ownership of the property?

debt_doctor · 19 February 2017 at 6:49PM

Lalaland27 wrote: »

Thank you for your reply.

I suppose my next question is twofold...

1. If it was originally listed / treated as a residential property by the OR can this be changed after discharge?

2. If it can be changed & so we are stuck with this - will we ever be able to regain ownership of the property?

Sorry to have brought you bad news. With your questions above, I would imagine that the Insolvency Service(IS) would simply say that initial information led us to believe the home was being lived in by the bankrupt but further investigation found that it wasn't - and so are justified in changing their view of the property.

With your second question, if the property is not treated as a family home, then there is no time limit for the trustee to realise the value in the property.
Even though the property may not be the family home (as per the Insolvency Act) an offer can still be made to buy the beneficial interest in the property from the trustee, it's just the fact that the trustee doesn't have to do it within a time scale.

Have you assessed the trustees current interest in the property? If solely owned it will likely be all of the current equity or if jointly owned 50% of the current equity.

Can this money be raised by anyone?

DD

Lalaland27 · 19 February 2017 at 9:22PM

On the first issue, they dealt with the property as a residential property for the first 18 months. We told the OR in the interview that we had given notice to our tenants & were returning to the property. This was given before the order & only went over due to statutory notice periods. They treated it as a residential property in the interview & the first 18 months or more after the order.

When they changed their minds it was literally a change of mind - they wrote after the 18 months as part of ongoing discussion on a separate issue to say 'by the way we have decided the property wasn't a residential home'

I take the point had we not been honest, but we were & they decided on their own to change the position. That just seems wrong.

On the second point - yes I can probably buy back the equity - how would that now happen? Could I do the £1,000 + costs still?

silvercar · 19 February 2017 at 11:30PM

On the second point - yes I can probably buy back the equity - how would that now happen? Could I do the £1,000 + costs still?

Depends on the value at the time you buy the beneficial interest. What is the current equity in the property? Be very aware that you don't want to increase the equity in the property if you are hoping to buy the BI. SO ideally you would want to be on an interest only mortgage and not making extra capital repayments.

Lalaland27 · 20 February 2017 at 12:45AM

Very little if any - we are on an interest only mortgage.

debt_doctor · 20 February 2017 at 10:00AM

Lalaland27 wrote: »

Very little if any - we are on an interest only mortgage.

Then yes, why not put in the offer and see what happens.
If it doesn't go your way then you might want to consider a formal complaint on how the property was originally dealt with, with as much evidence as possible - starting with your statement of affairs that lists this property not as your current address of that time.
DD

Lalaland27 · 20 February 2017 at 10:05AM

Thank you, that does seem like the best way forward!

I may write to them & just ask what happens when they divest the property back to me. See if they revert to the initial position or the new one, then if it's new make the offer then.

It's very frustrating!

Property / residential property help

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