Bought House but cannot register it in our name as old owner has debt on it

Robina_2

Hi there,
Can anyone give us advise please. We purchase our new flat and completed in May. Just received a letter from our solicitor to say that she has heard from the land registry and it cannot be registered in our name as the vendor has finance on it so we have to sue them for breach of contract. How could this happen surely our solicitor would do a check to see there were not outstanding debts on the property. We know they had a mortgage and this was paid off. We are really worried about this as we have a mortgage on the property and love our new home.

Thank you.

regards

Robina

star1_2

I'm sorry to hear about your predicment ....

This is somthing your solicitor should have found out legally during the conveycing process (ie. that no one has a legal charge over the property - that has not been declared), from the details you have provided it looks like they have fundermentally failed in correctly managing the house purchase for you (the only exceptions would be, if the legally sworn documents that the sellers solicitor exercuted and the land registery searches that would have been undertaken at the time of purchase were flawed or incorrect information was given).

Under these circumstances you MUST seek alternative legal advice (not from your current solicitor - as they appear to be part of the problem - from the details given).

Best of luck - hope that helps - and let us know how you get on .... also consider "naming and shaming the solicitor concerned - if it turns out they did'nt do their job correctly".

Debt_Free_Chick

I would establish the facts first. It could be that the vendor managed to arrange finance whilst you were in the process of buying the flat e.g. Solicitor checks land registry for charge. No charge, so you exchange and he then put the flat in hock.

You can get a copy of the land register online instantly for £2. That should show the charges on the property (including your own mortgage) and the dates they were filed. This will at least help you to decide whether the solicitor is at fault, or not.

I wouldn't panic just yet. It's an odd situation .... if there had been a charge on the property in the vendor's name at the time of completion, that should have been cleared by the money you paid for the property.

There is something not right here so firstly gather facts and evidence only. Then make a decision as to who is at fault.

Would be interested to hear how this one pans out - hope you can keep us posted.

Good luck

tifnstav

Getting copies of the land register wouldn't help really as it would only show what charges are registered at the moment, when you already know that they have some form of finance secured against the property.

At the beginning of the transaction your solicitor would have looked at the land registry documents to see what mortgages were secured on the property on the date the documents were produced. The seller's sols would have given an undertaking, that is a legal promise, to pay off the mortgages etc showing on the land register on that date.

Your solicitor would have done a search before they exchanged to make sure the seller hadn't got any new loans against the property since the date on the land registry documents.

it sounds like the sellers sols have made the mistake if your solicitor is talking about taking action against them, they may possibly have promised to pay off a particular loan then not done so.

i'm sure it will all be sorted out between sols and there'll be no need for you to worry about moving!
let me know how you get on!

clutton_2

this is most interesting, as theroetically, this should not happen. but this is the second case of this i have come across in recent months. a mate bought a house and in between exchange and completion, the vendor remortgaged it, and his solicitor slipped up, and he is left with a £25k charge against his property !! he has had to "talk firmly" to the previous owner, who is now trying to get hold of £25k to pay it off - this will be difficult as he was on the verge of repossession when he sold. one might be tempted to look for some collusion here - or maybe just gross incompetence by a very stressed solicitor.

jonnyw_2

Before sending the purchase price to the vendors solicitor it is essential for the buyers solicitor to obtain a personal undertaking from the sellers solicitor that charges on the property will be redeemed out of the purchase money.

If things went like this then the sellers solicitor will have promised to pay the debt off and it will be down to him and his personal responsibility to get this done.

If your solicitor failed to get that undertaking it will be down to your solicitor to sort it out. His search for what charges are on the property would reveal everything that was registered and needed to be dealt with, provided the search was done at the right time.

I wonder if some solicitors are relying on out of date searches?

I cant see myself how you as purchaser should be at risk here, or that you should have to sue the vendor or anyone else.

I would stop worrying too much and ask your solicitor whether he got an undertaking to pay off this debt, and if not why not.

epoman

Speaking as a solicitor, I would suggest that you do the following:

1. Ask your conveyancing solicitor to let you have a written (not oral) explanation of how this situation has arisen and what he proposes to put it right.

2. Take that letter to a solicitor specialising in professional negligence work and ask for their opinion (they may give a preliminary view without charge). They may wish to first obtain your conveyancing solicitors file.

I would not recommend that you try to make your own investigations - you really do need professional help to find out what has gone wrong and, more importantly, how to put it right.

clutton_2

thanks epoman, lets hope we get more of your most helpful advice !

Robina_2

Thank you everybody for you comments. I did look on the Land Registry Website and downloaded where it said charges. There is a charge on the property from July 2004 and that seems to be the only one. It is with a Finance Company.

I will do as epoman suggests and ask my solicitor to send me a letter with the reason completion on the property went ahead with an outstanding charge which was not cleared on completion.

The worry I have is that this looks like it is going to be very difficult to sort out. I know for a fact that the vendor owes money to many people and has not paid for any bills and car finance etc as we have had the letters still coming to us and have had to contact bailiffs and solicitors who are now closing in on her as our address is where everything is still in her name. Another worry is that she had our property in her maiden name and I am not sure if her new property is in that name or her married name. If it is in her married name or just in her husbands name then she could be 'made of straw' as they say and not have any assets. If that is the case how could she be sued for breach of contract for not clearing the charge on our property. I worry that the property is not really ours as it belongs in part to the finance people who have the charge on it.

regards

Robina

clutton_2

if you can prove that your solicitor is at fault (and this is not easy) surely their insurers will be responsible for paying this debt.

Hippychick

Your solicitor should have obtained the vendors solicitors undertaking to repay any charges registered on completion.

Just before you completed he should have carried out a priority search at H M Land Registry this would have revealed if any new charges have been registered or if there are any pending applications. If this revealed anything it could have been resolved before completion.

If your solicitor failed to do either of these two things then he is in breach. Although it is hard to know what to do without knowing all the facts.

I would speak to an alternative solicitor ask for them to request the file, if your solicitor is at fault then they must repay the charge in order to enable your registration to proceed. At the end of the day your solicitor has given an undertaking to your mortgage lender and not only to you to register the property and your mortgage.