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Risks of buying from someone who was declared bankrupt and valuation query
nostars
Posts: 9 Forumite
Hello!
We are ftbs and had found a property we really like last week, but there seems to be something strange going on with the vendor and we're now unsure whether to proceed.
Long story short, two similar sized properties within our budget goes up for sale around the same time in our preferred development. We viewed property A with agent A first, and found that we liked it a lot, and then went to view property B with agent B, and agent B tells us that they had tried to sell property A for two years but none of the sales could complete. We asked agent A who confirmed the situation with the vendor (had bankruptcy proceedings) but they assured us that in their opinion, vendor A can proceed with the sale, that the issues holding the last sales back were fixed and that because of the debts they are being pressured by the creditors to sell. Agent A initially told me that property A was valued at x amount, however the vendor wants £25k more and so increased the price. My guess is there is no room for negotiation there. Property A is currently empty and was a buy-to-let.
If property B was perfect we probably would walk away from property A entirely, but property B is smaller, has a bad aspect (overlooked directly by another flat), is currently tenanted and has a lot of damage esp around the windows and the boiler... and the vendor is asking for £40K more than A. Vendor B had purchased property B at the same time as A, and paid £25k less at that point (2003). It does however have a better layout, so we are happy to buy it, just not for that price. Agent B said the vendor can probably move on the price, but whether he can move by £40k... well... We are also worried that the price is way overvalued as if Agents A valuation is to be trusted, this flat is £65k overvalue at the very least. Similar sized flats in the area have sold for quite a variety of prices recently though, so it is quite difficult to gauge.
So we obtained the title register for property A and found the following:
- restriction placed in 2009 in favour of a credit lending company (who were in liquidation and dissolved in 2015 with 76 outstanding charges!)
- restriction placed start of 2016, bankruptcy notice of vendor
- registered charge dated 2003: mortgage provider.
- registered charge dated 2009: same company and date as above restriction.
- equitable charge created by interim charging order to a property management company dated 2011
- unilateral notice in respect of interim charging order with a law firm as beneficiaries placed end 2015.
Has anyone bought a flat with charges and restrictions on the register before? Or based on the above is it something you would not touch? Cost and value for money wise which flat do you think is better? Thanks in advance!
We are ftbs and had found a property we really like last week, but there seems to be something strange going on with the vendor and we're now unsure whether to proceed.
Long story short, two similar sized properties within our budget goes up for sale around the same time in our preferred development. We viewed property A with agent A first, and found that we liked it a lot, and then went to view property B with agent B, and agent B tells us that they had tried to sell property A for two years but none of the sales could complete. We asked agent A who confirmed the situation with the vendor (had bankruptcy proceedings) but they assured us that in their opinion, vendor A can proceed with the sale, that the issues holding the last sales back were fixed and that because of the debts they are being pressured by the creditors to sell. Agent A initially told me that property A was valued at x amount, however the vendor wants £25k more and so increased the price. My guess is there is no room for negotiation there. Property A is currently empty and was a buy-to-let.
If property B was perfect we probably would walk away from property A entirely, but property B is smaller, has a bad aspect (overlooked directly by another flat), is currently tenanted and has a lot of damage esp around the windows and the boiler... and the vendor is asking for £40K more than A. Vendor B had purchased property B at the same time as A, and paid £25k less at that point (2003). It does however have a better layout, so we are happy to buy it, just not for that price. Agent B said the vendor can probably move on the price, but whether he can move by £40k... well... We are also worried that the price is way overvalued as if Agents A valuation is to be trusted, this flat is £65k overvalue at the very least. Similar sized flats in the area have sold for quite a variety of prices recently though, so it is quite difficult to gauge.
So we obtained the title register for property A and found the following:
- restriction placed in 2009 in favour of a credit lending company (who were in liquidation and dissolved in 2015 with 76 outstanding charges!)
- restriction placed start of 2016, bankruptcy notice of vendor
- registered charge dated 2003: mortgage provider.
- registered charge dated 2009: same company and date as above restriction.
- equitable charge created by interim charging order to a property management company dated 2011
- unilateral notice in respect of interim charging order with a law firm as beneficiaries placed end 2015.
Has anyone bought a flat with charges and restrictions on the register before? Or based on the above is it something you would not touch? Cost and value for money wise which flat do you think is better? Thanks in advance!
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Comments
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If you're not in a rush, I'd start with A, but get the solicitor on the case first, and not apply for mortgage / get a survey / do searches etc until the solicitor is satisfied that there are no barriers to you obtaining clear title.0
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Are these the only two properties available at this time. They both seem to me to be more hassle than they are worth.0
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So we obtained the title register for property A and found the following:
- restriction placed in 2009 in favour of a credit lending company (who were in liquidation and dissolved in 2015 with 76 outstanding charges!)
- restriction placed start of 2016, bankruptcy notice of vendor
- registered charge dated 2003: mortgage provider.
- registered charge dated 2009: same company and date as above restriction.
- equitable charge created by interim charging order to a property management company dated 2011
- unilateral notice in respect of interim charging order with a law firm as beneficiaries placed end 2015.
I guess the extra risk is that all the chargeholders must agree to the sale.
If the sale value isn't enough to pay off all the chargeholders - one or more of them might object.
That may be why the vendor has increased the asking price by £25k - so they have enough money to pay all the chargeholders.
If so, if you offer any less, a chargeholder might block the sale.0 -
ThePants999 wrote: »If you're not in a rush, I'd start with A, but get the solicitor on the case first, and not apply for mortgage / get a survey / do searches etc until the solicitor is satisfied that there are no barriers to you obtaining clear title.
Hmm... we are not in a rush. Would the solicitors be the same people we would otherwise be using for conveyancing a straightforward property buying process? Do you have any recommendations as to how to go about finding one? Would this cost just a few hundreds or would it be in the thousands?0 -
Yeah cakeguts, they kind of are for our budget and flats rarely become available in that development or area. There might be more to come, since there's two at the same time this quarter, but over the last few years there were only the odd handful.0
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I guess the extra risk is that all the chargeholders must agree to the sale.
If the sale value isn't enough to pay off all the chargeholders - one or more of them might object.
That may be why the vendor has increased the asking price by £25k - so they have enough money to pay all the chargeholders.
If so, if you offer any less, a chargeholder might block the sale.
Ah ok, I suspected that might be the case. Any idea if a solicitor might be able to unearth the amounts owing? Not quite sure if we can take the agent or the vendor's word for the debt size.
I am not sure how bankruptcy works but I would have thought her debts would have been discharged after her bankruptcy ends?0 -
Yes, we're just talking about normal conveyancing solicitors here. Engage one, explain your concerns and tell them you want to resolve all legal concerns first, and not start searches. If they tell you "everything's OK", you can then proceed with everything else.Hmm... we are not in a rush. Would the solicitors be the same people we would otherwise be using for conveyancing a straightforward property buying process? Do you have any recommendations as to how to go about finding one? Would this cost just a few hundreds or would it be in the thousands?
The total legal fees, including all disbursements (except stamp duty), are typically high three figures to low four figures by the time you complete on the purchase - but the solicitor should be able to tell you what their fees are for an abortive transaction if they find significant issues and you pull out, and it really should only be a couple of hundred IMO.0 -
No, no details of the vendor's financial situation will be revealed to you. However, the vendor's solicitor will or won't be able to confirm that, with a purchase price of £X, they will be able to clear all the charges/restrictions and give you clear title. If they won't confirm that, on to the next property.Ah ok, I suspected that might be the case. Any idea if a solicitor might be able to unearth the amounts owing? Not quite sure if we can take the agent or the vendor's word for the debt size.0 -
It's the vendor's solicitor's problem to make sure that charges can be cleared. Your solicitor will ensure that's all in place.0
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ThePants999 wrote: »No, no details of the vendor's financial situation will be revealed to you. However, the vendor's solicitor will or won't be able to confirm that, with a purchase price of £X, they will be able to clear all the charges/restrictions and give you clear title. If they won't confirm that, on to the next property.
I'll call a few tomorrow for a quote then. Hopefully it wouldn't be a long drawn out process and I'll know soon as I would hate to wait months to find out I can't get a clear title
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