Bankruptcy search

Jaystarrr

I was wondering, why do solicitors need to do a bankruptcy search when the name of the person can just be typed into the insolvency register/gazette?

I'm not too clued up on conveyancing but it just seems like its something even the underwriter of the bank could be able to do. Is there a reason why it's done after exchange and not during the application process?

theartfullodger

Wouldn't have to do with the fees they charge for doing so would it....;)

davidmcn

Jaystarrr wrote: »

Is there a reason why it's done after exchange and not during the application process?

Search against whom? You need to search against the vendor immediately before completion to check they're still entitled to give you a clear title. And although covered by the lender's credit checks, there's no harm in their solicitor also checking that the borrower still isn't bankrupt.

Jaystarrr

Its a search against me and I'm the borrower. I'm not bankrupt nor have I ever been so I'm wondering why wait until the late stages rather than doing it as soon as my case is opened? I guess the only person it would do any potential harm to is the buyer so they're not too bothered when they do it.

davidmcn

Jaystarrr wrote: »

I'm wondering why wait until the late stages rather than doing it as soon as my case is opened?

Because the search needs to be up to date immediately before the point at which the lender's money is put at risk i.e. completion.

G_M

You might be declared bankrupt the day before Completion......

Yorkie1

theartfullodger wrote: »

Wouldn't have to do with the fees they charge for doing so would it....;)

No. It's a disbursement and they cannot charge anything extra on these.

G_M

Yorkie1 wrote: »

No. It's a disbursement and they cannot charge anything extra on these.

and it costs all of £2 !!!

plus:

http://www.simpsonmillar.co.uk/services/conveyancing/conveyancing-quote-costs.aspx#bankruptcy

Jaystarrr

and it costs all of £2 !!!

Why does it cost £2 the information is on a public register? Or is there a separate document that needs to be obtained for purchasing/remortgaging?

G_M

I can't believe you are quibbling over £2.00!

However:

Form K15 does not just check if the buyer/borrower is bankrupt. It also registers the search with the Land Registry and protects the lender for 30 days.

Without the K15 search/registration, the buyer could borrow the money; buy the property; then go bankrupt. The Official Receiver would then take over all the buyer's assets, including the property, leaving the mortage lender with..... zilch.

If the K15 search is registered, and the buyer then goes bankrupt, the lender gets 1st grab at the property during the 30 days before the Official Receiver. By the time the 30 days protection has expired, the purchase will have Completed, and the lender's Charge will be registered against the property Title, and again, this would take precedence over any claim by the Official Receiver when winding up the buyer/borrower's assets.

So the search effectively protects the lender during the gap between handing over their money, and their Charge being registered with the LR (which cannot be done till SDLT is paid to HMRC).

Jaystarrr

G_M wrote: »

I can't believe you are quibbling over £2.00!

However:

Form K15 does not just check if the buyer/borrower is bankrupt. It also registers the search with the Land Registry and protects the lender for 30 days.

Without the K15 search/registration, the buyer could borrow the money; buy the propert; then go bankrupt. The Official Receiver would then take over all the buyer's assets, including the property, leaving the mortage lender with..... zilch.

If the K15 search is registered, and the buyer then goes bankrupt, the lender gets 1st grab at the property before the Official Receiver, during the 30 days. by the time the 30 days protection has expired, the purchase will have Completed, and the lender's Charge will be registered against the property Title, and again, this would take precedence over any claim by the Official Receiver when winding up the buyer/borrower's assets.

Haha! True! Well, today I have learnt that the bankruptcy search is more than a bankruptcy search so thank you.

The £2.00 is nothing compared to what I might potentially be going through right now. My contracts have been exchanged and now found out the application is gone back to the underwriter. So in the worst case, I may be out of tens of thousands of pounds!