Business partner going bankrupt, advice needed

munkachunka

Hi all, any info would be greatly appreciated.

My 'business partner' may be going bankrupt due to a divorce and having other properties he can now not afford, I really don't know where this leaves me, he has said that if he is forced to go bankrupt he will sell his half of the house to me for a pound, that is all well and good, however I very much doubt the bank would lend me the money to do that. the mortgage is for 274000 and I only earn 41K. bummer. the rubbish thing is, I have just secured a 2 year tenancy for £1230 PCM, it is with a hotel company and the mortgage is currently only about £900 PCM and soon to be £800 ( good profit at the moment due to interest rate reductions)
We do not have an official business together and so there is nothing to liquidate as such, our only ties are this mortgage.
could someone tell me if the courts will force me to sell? as we only brought the property in Sept 2006 we will most definitely be in negative equity and so I will loose out.

thanks
stu

DON79

Hi munkachunka -

what your partner means is, if he does go BR, then he will sell his beneficial interest in his home to you for £1 plus costs approx £220 - this is assuming the property is currently in negative equity - then when the property market recovers and if the house is ever sold, you would receive 50% of the equity from the sale of the property. Sorry, lol, had a picture of you asking the bank to lend you a £1. You do not need to actually buy the house at all.

The joint mortgage may well be investigated by the official receiver - he would be interested to realise a share of any equity in this mortgage which would count as an asset in the BR person's estate - you would have the opportunity to buy this back from the OR also for 50% of the equity and I can see where you are coming from regarding this and asking the bank to lend you money for that if it does have quite a bit of equity. If it has negative equity, then the same £1 plus costs rule will apply.

Have you called business debtline at all to see if they can give you any advice? The number is in the sticky at the top of the forum.

Hope this has helped a little.

Donna

munkachunka

Donna,

many thanks for that, LOL, I think I can rustle up a pound. sorry if I am being thick but can I just confirm a couple of points.

If my Business partner sold his half of the property to me before going bankrupt then would the official receiver have an interest in the property?

You say that I don't actually have to buy the property, if my bus partner sells to me then I will be responsible for the whole mortgage, will the bank not care that I will now own the whole property? does the bank see the mortgage as a single loan for 270K between the two of us and not 135K each?

How would someone go about selling they're beneficial interest in a property?

From the info you have given me my mind is a bit more at rest, I thought if he went bankrupt we would be forced to sell at a loss and so I would loose out.

thanks again. Stu

DON79

Hi

It would not be a good idea to transfer the property before BR as the OR could see this as disposing of an asset. And the OR would have the power to reverse the transaction if he believed it had been done to hide an asset. Best to do it officially with the OR after the BR.

You would become responsible for the whole mortgage I believe (but could be wrong) but you would also be fully entitled to the whole of the equity. The bank will not be bothered as long as the mortgage payments are maintained. With a mortgage - you are both currently termed as jointly and severally liable for the whole amount - so it is one single loan between you.

The BI purchase will be processed by the OR and paperwork gets completed which I believe is registered with the Land Registry to say who now has an interest in the property.

It is very rare that a sale is forced by the OR, they want as little hassle as possible and it would take a lot of time and effort just now to market a property and sell it on - if it sells and how long it would take to sell as well.

Donna

munkachunka

Donna

Thanks a million, will sleep easier now.

Cheers

stu
:beer: