Property with debts - does this mean we'll lose it?

annie_m

Hi All,

We're in the middle of buying our first home. House sitting empty since Feb, we have had a price agreed since July, (not far off the asking price of £200,000) however the vendors estranged husband filed for bankruptcy shortly after, which has slowed things down considerably.

There are 2 or 3 debts filed against the property, however everything that needed to be done regarding those debts had been done and finally we were due to complete and exchange this coming Wednesday.

We called this morning to check progress, make sure funds had transferred ready for the sale, and the solicitor said that one of the checks she had expected back hadn't been received which was strange/not good. She chased it up and it appears a further debt (of around £20,000) was filed against the property on 17 Sep (shortly after the initial checks were carried out). We now beleive that the house will need to be repossessed, and possibly sold at auction.

Our deposit and fees are transferred and sitting in our sols account ready to go for Wednesday morning. I can't see why a bank would need to go through with auction when we are ready, right now to buy this empty house.

What I'm wondering if anyone knows, is what happens now? Even if the bank agree to go ahead with the sale to us, will we have to wait an(other) eternity for whatever paperwork this entails to go through?

Any help would really be greatly appreciated......as we've been saying to our Estate Agents and Solicitor for the past 4 months...........:(

DVardysShadow

The really important question is whether your price clears all of the debts. If it does, you should be OK. The tricky one to watch out for is if the estranged couple are not quite so estranged and the house was put into her name before her husband went bankrupt. The official receiver can take possession and use the house to settle the bankrupt's debts as far as possible. This means that unsecured debts are added to the amount to be paid from the house.

Do you know anymore about the debts in question?

annie_m

Thanks for replying DVardysShadow.

Well we know that the house is in negative equity, so (from my understanding of it all, which is just going by what the solicitors have said) this latest debt won't be covered by the sale, I don't think any of them will other than the outstanding mortgage.

As it is we have agreed to cover both sets of solicitors fees as well as the Estate Agents fees as there are no proceeds from the sale to cover them in the usual way and it was the only way we could get anyone to work on the sale in the end.

According to the Estate Agents they've split up and are communicating through a third party, which we've had no reason not to believe. The woman involved apparrently doesn't want to go bankrupt although her husband has, so maybe it is dodgy.....

I'm going to find out more about who's name the house is in and this latest debt. We have the solicitors trying to find out if the bank (are these also the receivers?) are still prepared to proceed with the sale to us.

It's hard trying to buy for the first time and get our heads around the complications of bankruptcy.

DVardysShadow

All moved to https://forums.moneysavingexpert.com/discussion/2758818