Purchased a repossessed property - now the bank have found more debt!!

kp1989

Hi! I'm new to the forum but hoping that someone can help my tricky situation..!

I purchased a repossessed property at auction in March. The purchase price was £90,000 and I paid a 10% deposit straight away at the auction. I have got the mortgage offer and everything was set to go through to complete on April 21st. But a week before, my solicitor called me saying that there is a problem with the sale as when the bank was finalising the settlement figures, they had found an additional debt of £15,000!

The seller's original seller's debt was £89k (covered by the purchase price) so now he owes £104k. At first the seller said that he was trying to negotiate with the lenders to repay the additional debt under a separate agreement to allow the sale of the property to go through but now the seller is claiming that he does not know where this additional debt has come from and believes that his ex might have forged his signature on something to borrow money against the house!

My solicitor did say I could rescind the contract and get my deposit back but my priority at the moment is to get the house (I'm a first time buyer btw!) so we have told the seller that we are prepared to wait a reasonable amount of time and will not give a notice to complete just yet. The seller is also currently living in Australia so has a power of attorney here dealing with the sale. Therefore, my solicitor said it probably isn't worth suing for breach of contract as he is in Australia and it wouldn't be worth the legal costs of it.

It's now been 2 1/2 weeks past the original completion date and we have not received any clear responses from the sellers solicitors. I've also spoken with the letting agent dealing with the sale and they have said that they have never had a case like this before where an additional debt has been discovered after the sale.

So I was wondering if there was anyone who had any ideas as to what to do !!!! Ideally my priority is to get the house so I don't want to back out but I'm not willing to pay any extra for the purchase of the property (if they decided to put it back on the market) as it's not my fault that they didn't do their sums properly in the first place!

The deposit has already been paid and I've signed the sale memorandum so is there any action I can take to get the sale of the house completed or are the sellers lenders in complete control right now?

Any help would be appreciated!!

P.s the house is perfect for me in terms of location, size etc and on the same road that I grew up (sentimental value!) so that's why I don't want to give it up! I'm also living at home with parents at the moment so there's no chain and I can wait longer if I need to

G_M

* If the Charge is not removed from the Title, buy the house and take on the debt

* If the Charge is not removed from the Title, walk away and get your deposit back

* wait (and hope you are not still waiting in 3 months time)

* put a deadline on removal of the debt, and then walk away and get your deposit back

* sue the seller in Australia for breach

I know which I would do........

AdrianC

The places has been repossessed, so the previous occupant isn't the person you'd be suing for breach of contract. That's the vendor, the lender who's repossessed it.

I'd have thought the extra debt was between them and their customer, not between you and them - and certainly not between you and him.

bouicca21

Wot AdrianC said. If it is repossessed then the seller is the bank/mortgage company not the debtor. Do you mean it was under threat of repossession rather than actual repossession?

Guest101

How does the bank 'find' additional debt. It's either secured on the property or not.

This sounds like it could be unsecured borrowing the bank is trying to recoup

DTDfanBoy

Guest101 wrote: »

How does the bank 'find' additional debt. It's either secured on the property or not.

This sounds like it could be unsecured borrowing the bank is trying to recoup

It sounds more like the property has not yet been repossessed, and a desperate owner is trying to get rid of the property themselves.

Guest101

DTDfanBoy wrote: »

It sounds more like the property has not yet been repossessed, and a desperate owner is trying to get rid of the property themselves.

Good point, didnt read it like that but see what you mean

AdrianC

You didn't read it like that, because it's not what the OP said... They definitely said it was repossessed. Which it doesn't sound like it is... yet.

bris

It can't be reposed yet, the seller is in Australia according to the OP.


The bank are refusing to allow the sale to go through because of the debt on the property and the seller looks like he is making up stories as to who's to blame.


To me this looks like the seller tried to get a sale through quickly but the bank have pulled the plug.

kp1989

Thank you for your replies!

Yes, sorry my mistake it's a threat to repossess and the seller is forced to sell to repay the debt

We have no idea how the lender has found the additional debt! £15k is a large amount to suddenly appear! As they said they were not aware of this prior to the auction..

Is it straightforward that the money is still owing therefore they can stop the sale and possibly put it back on the market at a higher price to recover the debt?

Or will it depend on who is to blame? If the seller hid the debt, then can the lenders stop the sale? Mistakes happen but I find it unlikely that the bank miscalculated the debt by £15k?!

We've been chasing the seller's solicitors for an update and were hoping for something before the weekend, but haven't heard anything from them today!

G_M

Presumably a condition of the sale at auction was that the property would be sold with vacant possession and with all Charges (debts) removed.

The seller clearly thought that if the property reached whatever 'reserve price' he put on the auction, he could then pay off the debts and remove the Charges.

Now he finds he owes more than he thought, and does not have enouch cash to pay off the debt. So he cannot remove the Charges. So he is in breach of the conditions of sale.

Either he finds the cash from somewhere else, or you sue him (in Australia......) or you back out of the sale and get your cash back (se post 2)