Equity from house sale all go to IVA?

FayMckenna

Hi,

I posted a few days ago but now have more information so I'm hoping for some help.

My dad and his business partner each have a secured loan on their properties but have both also entered an IVA. I have 2 questions:-

1. If my parents sell their house to pay the secured loans (mortgage and bank loan) does my dad's half of the remaining equity all have to go to his IVA?

2. Is it acceptable for me to buy the house from my parents for just enough to cover the secured loans or would this be somehow illegal because of the IVA?

Both my parents are coming up to retirement age and I'd gladly buy the property to allow them to stay there but I can't afford to pay anywhere near it's true value. Their mortgage is almost finished so there's a lot of equity even in the current housing market. I hate to have seen them work hard all their lives and then lose everything just because dad's business got bit by the recession and a couple of non paying customers. I just feel there must be a way for me to help them keep their home but the bank are pressuring them to sell to pay off the secured loan of £80,000 and I can't raise that kind of money apart from to buy the house from them for way below market value.

FoggyBrain_2

Hi. I am afraid that if you purchase for way below the market value the creditors could move to have the sale reversed as it will be viewed as a device for artificially reducing assets. If it were not for the insolvency this could have been done with your parents gifting you the balance "In consideration of their love and affection". However, even this could be subject to reversal, say, if your parents needed care, or died soon after ( God Forbid) and the FMV would have fallen within the remit of Inheritance Tax.

No longer is an "Englishman's House His Castle" ... or anybody's in fact, that's just how the saying goes!