Unilateral Notice - Removal

John_Berry

Hi!

I'm about to buy a property which has a unilateral notice on it and want to know how i can get it removed if the beneficiary refuses to remove it.

Its a complicated scenario. The house is currently repossessed by the banks and the previous owner was declared bankrupt prior to the banks taking it off him. Previous owner had bought property in 1998 and tried to sell it in 2003. The deposit was taken in May 2003 by the seller but the contract was breached. It is not possible to know who breached the contract of sale. It could have been Buyer or seller. The estate agents reckon the buyers mortgage didn't come through in time and the seller refused to give the deposit back. As it was some time ago the facts relating to the sale are hard to establish.


The unilateral notice was put on the property's title under the section charges register in August 2007. 4 years after the sale fell through of the May 2003 contract of sale.

Subsequently the owner was declared bankrupt in January 2007 and left the country in June 2009. The banks finally repossessed the house in March 2010.
The peculiar thing is in July 2003 Approx 6 weeks after the alleged agreed contract of exchange was due to take place an inhabitation order under the criminal justice act was placed on the register not allowing the owner to dispose of the property without a court order. Would i be held liable to the 2007 unilateral notice for 2003 sale of contract despite the contract was not signed or made by me and i have never received the deposit but it was the previous owner who went bankrupt, had a court inhibition notice and had the house repossessed by the lenders.


November 1998 - Vendor buys property.
May 2003 - Vendor agrees sale and accepts deposit. Buyer can't complete in time
July 2003 - Court places order so vendor can not dispose of property.
January 2007 - Vendor declared bankrupt.
August 2007 - Unilateral notice in breach of 2003 contract of sale placed in register
June 2009 - Vendor left country
March 2010 - Property repossessed

Can the 2003 buyer hold me responsible and take me to court for damages and compensation for the previous owners sale of contract. Even though he was declared bankrupt and had his house repossessed and i bought it off the banks. The bank's solicitors say they can not have this unilateral notice removed as the previous buyer refuses to remove it.

My solicitor has never come across an issue of this sort and can only advise on the basics so i am not sure who the best person to speak is on this issue. I would be grateful for your input. John
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PasturesNew

This looks like it covers it: http://www.thedca.co.uk/press.cfm?pressID=20

silvercar

The previous buyer needs to be taken to court (probably by the bank in repossession) to be told either to complete the purchase or relinquish the contract. It seems odd and wrong that the buyer can have a hold for not being able complete the contract previously and to prevent someone from now buying the property - either they want it (and at the 2003 contract price it must make a good deal) or they don't want it and should walk away.

All complicated further by the bankruptcy meaning that any money left over after the lender has recovered mortgage and costs should go to the Official Receiver, who should be ensuring that the price obtained is reasonable market value.

John_Berry

Thank you PasturesNew Just read the DCA article and it is pretty much what has happened. The Bank can remove every charge including bankruptcy except the unilateral notice. They've tried approaching the other party but he has refused. They advice that we must after purchasing resolve this by negotiating or taking the other party to court to get them to cancel the notice. What we are unsure of is if we go to court and we have no documents or paperwork or proof of what contract was exchanged with the previous owner and we where never the recipients of the deposit. What would be the chances the court finds in his favour would we have to compensate the buyer legally speaking even if we bought the house under an order from the lenders because on purchasing the property the title was not clean and had an entry for unilateral notice still attached.

My solicitor says the other party will be set to make 2/3 times the price he was going to pay in 2003 so he will definitely take you to court to try and win the property back. This guy is being such a bully and a menace.

Imp

It sounds like the vendor is the bully and the menace. The person with the unilateral notice is just waiting to be compensated for the breach of contract by the vendor. You are in the middle of it all.

John_Berry

The vendor has disappeared of the planet now. No one can get hold of them. The buyer should have taken the vendor to court in 2003 to resolve the matter if deposit was not returned because their mortgage was late. Subsequently 6 weeks later an inhibition was put in place by the courts not allowing for deposition under a criminal act. Its quite clear the vendor knew in 2003 that his property was going to be part of a court case and was looking for a quick sale before it was stopped by the court. This guy doesn't want deposit back. he wants the house at the 2003 price agreed with the previous vendor and believes its enforceable. The banks solicitors have said the repossession order voids all rights and dealings with previous vendor. If i bought the property would the other party have a strong case against me or would the courts throw it out as i never made the deal and bought the property off the banks receiver.

Imp

Seriously, if your solicitor can't advise you on this, then get another one quick sharp. Ideally one who has dealt with this before. I would be vary wary of taking advise from anyone else's solicitor, as all their clients want is your money.

John_Berry

I know thats what i need to do but i don't know any lawyers who specialise in this sort of issue. I need someone who really specializes in property law's. Its difficult to know as its my first time in this situation who will be a good solicitor and know what they are doing. I get the feeling a lot of them would say they can deal with this as they are general conveyance lawyers but it would need someone who knows all the ins and outs. My solicitor was open and honest that he has never dealt with an issue like this and the outcomes varied.

Can anyone recommend a good solicitor who could advise me on the situation? I'm in London but anyone around the South East would be welcomed. I appreciate the comments and advice I'm receiving on this forum site and think its a brilliant place to come for advice and discussion.

DVardysShadow

John_Berry wrote: »

1. November 1998 - Vendor buys property. Lender provides funds under mortgage.
2. May 2003 - Vendor agrees sale and accepts deposit. Buyer can't complete in time
3. July 2003 - Court places order so vendor can not dispose of property.
4. Court Order lifted [or not]
5. Lender possibly provides further advance???
6. January 2007 - Vendor declared bankrupt.
7. August 2007 - Unilateral notice in breach of 2003 contract of sale placed in register
8. June 2009 - Vendor left country
9. March 2010 - Property repossessed

What an interesting problem!!! In your position, I would not be taking any risks over this - the unilateral notice has to be removed. But let us look at what has happened.

I have added 2 other things in red which I think need to be taken into account.

Plainly to me, the lender has first claim on the value of the initial loan and all arrears of interest.

Next comes the thwarted buyer, on the strength of a contract. It seems to me to be relevant as to who breached the contract, but I would not take the word of the repo bank's Estate Agent for it being the fault of the buyer [They would say that wouldn't they ... ]. More likely to my mind the buyer was prevented by the imminent court proceedings - perhaps an uncontested interim order given on application, which you don't know about because it was superseded by a later order given after a proper hearing and representations.

But these interests are trumped by the court order, which in turn is trumped if it is lifted.

If the lender has lent more money after the contract, this may complicate the issue, but my personal opinion is that the sale contract should trump the security of the loan, except that as the buyer did not register the contract until after the vendor was declared bankrupt - and therefore after any possible further advance, any further advance comes ahead of the buyer's interest. Ignore this para if there was no further advance.

Now this all gets crystallized at the date of the Vendor's bankruptcy. The Lender retains the security he has in the property. The buyer is an unsecured creditor, since his rights come under contract [ie the same standing as a mobile phone contract]. His argument is with the Official Receiver, who owns the bit of the house which the lender does not have security on.

So over to Bankruptcy law. I think that the buyer's claim on the contract ends here, and he gets whatever percentage payout there is in the bankruptcy for the penalties in the contract. Unless, of course, it was in the interests of the bankrupt seller's estate to see the contract through - but this is unlikely for a contract to buy at 2003 prices being executed in 2007.

Without the bankruptcy, I believe that the buyer still has an interest through the contract - which if it is sufficient to clear the lender's rights - should have precedence over any present day offer to the bank.

That is just my non lawyer take on it all.

The fly in the ointment is the contracted buyer. He has to be backed down. If he has not had his rightful payout from the Official Receiver, I think he is going to cause grief - and I would not touch the property until he relinquishes his claim. This is the job of the repo bank to sort out - they have the clout to get their way, even if it means buying the contracted buyer off. It is not something to be taken on by a Joe Public owner occupier.

silvercar

Interesting interpretation Dvardysshadow. Trying to see it from the 2003 buyers point of view. If the buyer was at fault in not completing ie he no longer wished to complete, he wouldn't have had any interest in registering the charge. So I would guess it was the seller that prevented the sales contract completing, possibly because he didn't wish to move out as his credit rating was stuffed or because an onward chain failed. Assuming the buyer has some sort of legal advice, he would only have registered his interest on the deeds if he thought he had some entitlement, so I suspect that his claim may be ahead of the official receiver's claim, especially as his claim relates to a contract entered into before the bankruptcy.

Another thought, as the property has been repossessed, isn't it the duty of the bank to distribute any equity after the mortgage is cleared according to the law/ deeds? So it would be for the bank in repossession to get the official receiver and the 2003 buyer's interest removed from the deeds.

Again just supposition, no legal knowledge.

DVardysShadow

Hmm. I am getting hung up on 'Inhabitation Order" and the Criminal Justice act. Is this really the case or are we really looking at an 'Inhibition Order' under civil law? A bit of clrification here would help the thinking, probably.