Buying a new home, sellers have bad debt against the house!

vicky_elston

Does any one have any advise?

The sellers have SEVEN bad debts against the house with various credit card companies and banks. I have been advised by my solicitor that they are against the house, and in order for them to sell, a letter needs to come from each independant bank/lender.

They are not livign in the house athe moment, and are living with their parents. We are first time buyers, and of course are concerned!

Does anyone know what happens if these cannot be removed? Is there a way round this?

thanks for your help

p00hsticks

I'm not an expert but as far as I know.....

If you mean that the creditors have had charges lodged against the property on the land registry, then to get them removed the owners have to pay off the debt. If there's plenty of equity in the house then they'll be able to use the money from the sale to do that as paert of the selling process, but if there is no or negative equity then they're going to have to find some other means fo raising the money - e.g. by getting a loan, which may be difficult in the current climate with their credit record.

vicky_elston

Thank you! do you know what happens if the sellers decclare themselves bankrupt? will the house be reposessed or could we still buy?

Thank you for your help

p00hsticks

I'm not sure I'm afraid - hopefully someone else will know the answer to that one.

peachyprice

If the debts are secured against the house the only ways the vendor can get rid of them is to sell the house for enough to pay off the mortgage and secured debts, or for the house to be repossessed.

Just them going bankrupt would not dissolve the secured debts as they will not be included in the bankruptcy until the house is either sold or repossessed but if they are selling for less than the value of the mortgage and/or debts any of the creditors had block the sale, which is, I presume, what your solicitor is concerned about.

HTH

Pee

Your solicitor will make sure that each of these creditors knows the house is being sold and is consenting to it, effectively clearing any debts before you and your mortgage company proceed to purchase it. If this can't happen, the house purchase will fall through. It is a bit of a logistical problem, but the creditors are likely to simply consent.