Buying an insolvent house? Help?

Nutella18

Hi

I have had an offer accepted on a property. It went to a closing date (Scotland) and out of 8 bids I won. Yeee:beer:

Anyway after the offer was accepted and mortgage offer has been issued my solisitor informed me I am buying it from the bank as the house has been made insolvent. The only details I got from the EA is that they occupier died nothing else but she basically said the house is insolvent and the bank are getting the money.

This is totally alien to me but she basically said that the family have washed there hands of it and it is now in hands of the bank. What I don’t understand is why would the family not just sell the house to pay debts and keep the rest?

The house is ex council so they would of bought it for a really low price, I paid 5k over home report valuation at 110k but surely there can’t be that much debt on the property, the lady that stayed there was old.

Just looking for any advice you have to offer on the situation, I didn’t exactly get a bargain as I am paying a good price. It is a exceptionally popular neighbourhood and the houses go over valuation by about 5k-20k depending on state.

tealady

Not sure what advice you are looking for really.
What I will say is if you want the house and are happy with the price then go ahead. Your solicitor should deal with issues such as ownership.
Perhaps there are debts against the property which wont be fully cleared by selling that's why the family wont get involved?

AnotherJoe

The "house" has been made insolvent? Do you mean the estate of the previous owner? Most likely the family haven't got involved because, for example, the house is selling for £110k and the estate owes more than that, so what's in it for them to sell the house, there's not even money to cover their time and expense.
It doesn't matter to you if the estate of the previous owner was insolvent as long as the legal side is tied up and you end up owning it at all price you agreed to pay.

G_M

Nutella18 wrote: »

...... my solisitor informed me I am buying it from the bank as the house has been made insolvent.
Houses donot manage their finances- their owners do. It is the former owner who is insolvent!

What I don’t understand is why would the family not just sell the house to pay debts and keep the rest?
Presumably the debs are greatr than the value of the property.

The house is ex council so they would of bought it for a really low price, I paid 5k over home report valuation at 110k but surely there can’t be that much debt on the property, the lady that stayed there was old.
I'm afraid I don't know anything about this elderly lady's finances or circumstances.And nor do you.

Just looking for any advice .

Put a contingency fund to one side to cover any damage/repairs needed. The bank won't know (or care) anything about the property, and until you own and move in you won't be sure what issues might come out of the woodwork.....

AnotherJoe

The house is ex council so they would of bought it for a really low price, I paid 5k over home report valuation at 110k but surely there can’t be that much debt on the property, the lady that stayed there was old.

Three strange assumptions you've made there.

1, Old people cannot have much debt,
2. They cannot have more debt than a house minus any outstanding mortgage on it is worth.
3. The debt they have is all on their property.

Davesnave

Nutella18 wrote: »

Just looking for any advice you have to offer on the situation

The 'situation,' as you outlined it, seems normal in a financial sense:


"I paid 5k over home report valuation at 110k..."

"I didn’t exactly get a bargain .....It is a exceptionally popular neighbourhood and the houses go over valuation by about 5k-20k, depending on state."

The only thing that seems different, compared with a sale where the owner is alive and sentient, will be that the usual questions they might answer will have to wait, at least until you take possession.

AlexMac

One of life's mysteries...?

Nutella18 wrote: »

What I don’t understand is why would the family not just sell the house to pay debts and keep the rest?...

or perhaps
- the owner took out equity loans or lifetime mortgages on the gaff and the chiselling bedsteds in the bank now want their pound of flesh
or
- the owner went into care at anything up to £35k pa and the chiselling bedsteds in the Council now want their pound of flesh
or
- the owner had a serious gambling habit and the chiselling bedsteds in the bookie's now want to break her fingers or, as this is no longer practicable, their pound of flesh
or I could go on (and frequently do)...

but as

Nutella18 wrote: »

... I (only) paid 5k over home report valuation ...It is a exceptionally popular neighbourhood and the houses go over valuation by about 5k-20k depending on state.

why worry! Congratulations on your new home

AnotherJoe

AlexMac wrote: »

- the owner went into care at anything up to £35k pa

.. and the rest ! I have a friend paying £1400/week for his mother which is double your "up to" figure !

davidmcn

Nutella18 wrote: »

Just looking for any advice you have to offer on the situation

What do you want advice about? You don't need to know anything about the background to the former owner's finances. Your solicitor will deal with you getting good title for the property. As the bank don't know anything about the property you won't get any of the ancillary warranties that you would usually get from a "normal" seller (though those are often of doubtful value).

If the owner had been broke for a while then they probably will have neglected any routine maintenance, and the property will be sold as seen, so have a good check of everything before concluding missives and/or be prepared for surprise things needing fixed.

kazwookie

Enjoy your new house, and remember to change all the door locks.

davidmcn

kazwookie wrote: »

Enjoy your new house, and remember to change all the door locks.

The first thing the bank would have done is change the locks, if you mean worrying about whether the previous owner is going to let themselves in.