Legal claim after selling house while bankrupt

Mr2018

(I am not asking for legal advice)

Hi all, I've followed this thread for a while, helping me in bankruptcy journey (thank you), and now something has come up leading me to ask for members help please.

I am 10 months into my bankruptcy.  At the start I did own a house in joint names with my ex-partner.  After seeking a lot of independent advice (StepChange) and other advice from a well informed friend, I decided it was the right thing for me to do despite the house.  It was a new build house bought 4 years earlier with very little equity in it.

The process was very straight forward, I received 3 forms to fill in re the house and a charge was put on it, I declared I was happy to sell it and the OR put a claim on my share of the house (50%).  I then sold the house in agreement with my ex-partner and the OR took my fairly nominal equity.

Some months after the sale, the buyers have raised a misrepresentation claim against me and my ex-partner due to a flooding incident prior to the sale.  The details here are long but in short I don't believe I have, but they are pursing it non the less.  My conveying solicitor states they do not defend disputes/misrepresentation cases and so I need to seek specialist legal advice.  I have enquired about this, but the costs are high, which I will struggle with.  I do not have an IPA, and so I couldn't raise money by increasing my costs and reducing any IPA.

My question to this group is, given I am still an undischarged bankrupt and I 'gave up' the house as part of the bankruptcy, selling it with the OR taking my equity.  I am liable for any claim made against it/me? Or would any such monies awarded (should they win) come under my bankruptcy?  Do I treat the solicitors as a creditor and write to them declaring I am bankrupt? I might add this is only for my share, my ex will be responsible for her share.

I would appreciate anyone's educated thoughts, past experiences or knowledge on the situation.  I totally understand this is a legal situation and so the definitive advice will be to seek legal advice.  But I was hoping people did have some thoughts they could offer that might educate me a bit more on my situation re the bankruptcy element.  Thank you

[Deleted User]

The claim against you and any solicitors costs are post your bankruptcy, from what you describe, so couldn't now be included. 

The claim against you will need to be dealt with in its own right.

The main question is how serious the buyers are about pursuing your perceived misrepresentation. What are the details of the claim?

Mr2018

So it is treated as a 'new debt' and not one that was associated to the sale of the house which was included in my bankruptcy? 

In brief, the circumstances relate to a flooding incident.  They believe they weren't told/or weren't told the full extend of the flooding (their position changed in their letters from not knowing to not being told the full extent).  My position is that the PIF form was filled it and stated that it had flooded.  I had no direct contact with the buyers, the estate agent did the viewings etc and they told them.  I don't believe the buyers had a survey done, so I believe that they had enough information to investigate themselves or ask more questions prior to the sale but went ahead anyway, and so the 'buyer beware' comes into play.  But the options are do nothing and risk court action or defend it but win or lose I pay excessive legal fees, then obviously more if I lose.  I get the feeling they do not want to go down the court route as they keep saying they are open to a settlement in their letters but other than that no idea if they actually would pursue it or not.  I believe the costs and risks are quite low with small claims court? 

MalMonroe

First of all, your ex-partner is involved too, so you shouldn't have to shoulder all the costs alone - if indeed there are any to be paid.

New builds should have a 10 year builders' warranty.  Is the property still within that warranty? If flooding is a problem was the builder ever aware of that? And if you sold within the 10 year warranty period, it should have been transferred to the new owners who should sue the builder. It could be that the builder should not even have built on that particular area of land. (That happened to a friend of mine - developer built next to a river which burst its banks when we had heavy rains and flooding. He could not claim insurance as they stated that the house should not have been built in that particular place. He ended up suing the builder. And won.)

What I'd do is contact Citizens Advice - even if you have to wait to speak to someone it's well worth it. If they can't help you they will point you in the right direction. 

https://www.citizensadvice.org.uk/about-us/contact-us/contact-us/contact-us/

Here is some citizens advice info about affordable legal help -

https://www.citizensadvice.org.uk/law-and-courts/legal-system/finding-free-or-affordable-legal-help/

I once used a solicitor from the Legal Clinic at the university I graduated from. He was a fully qualified professional who lectured two days a week there and he was absolutely first class and free. He did also say that you did not have to be an ex student to apply for help, all members of the community were welcome to ask. So that's worth a thought. Law Clinics are mentioned in the above link.

I do hope you manage to get things sorted out. It's a worrying time. I had a DRO a few years ago so I know a bit of what you're going through. But to have this extra worry on top of everything else really isn't what you need.  

Mr2018

Thank you for the information, I will check it all out.  I see CAB advised a lot on here, but my experiences (albeit some time ago now) were that they were very general and the staff no more help then google, has this changed or have I just had bad experiences? 

Yes the building had a warranty which was passed on.  The flooding was not from any plain it was caused by a blocked drain on the adjacent highway.  United Utilities, the council and the developers are aware of it but no one took responsibility for it.  The claim comes down to they did not feel they were told and have had to (in their opinion) replace all the carpets and skirt boards and other stuff at a cost to them and they want damages for having to do that.  When I say it flooded, it got in the integral garage and dampened the carpets, so don't think Noah or anything like that.  I did not put an insurance claim in and simply disinfected the garage, shampooed the carpets and got on with my life.

It is all very stressful. I'm 2 months away from what I thought was my fresh start.  So was hope more than expectation that my bankruptcy would somehow protect me from any legal action from the house sale.

fatbelly

s382 of the insolvency act defines a bankruptcy debt as 

(a)any debt or liability to which he is subject at the commencement of the bankruptcy,

(b)any debt or liability to which he may become subject after the commencement of the bankruptcy (including after his discharge from bankruptcy) by reason of any obligation incurred before the commencement of the bankruptcy,

I don't think your potential debt could be covered by (a) or (b) though it would be nice if it was!

I do think they're a bit optimistic in suing a bankrupt for compensation though. CAB won't be a lot of use in all probability. If you have a Law Centre where you live that might be worth a try

TripleH

Apologies, but hss it flooded again since they took ownership?

Is the cause the same as last time?

If so I think they are after the wrong people, should it not be the cause of the flooding (drain) they should pursue?

Keep_pedalling

I read it that they want money for damage to the skirting and carpet that was already in place when they purchased the house, in which case the buyers are taking the proverbial, and I bet they want you to pay for a brand new expensive carpet to replace the original.

I think you should ask for advice on the housing board about defending what sounds like a frivolous claim over on the housing board. You don’t need to go into details about bankruptcy there just look for advice on fending of the claim. If they take it that far it will likely to go through the small claims court which would not require you to hire a solicitor to defend. With a bit of luck a well drafted response will be all that is required.

Mr2018

Many thanks for the replies.  I have now sent of a referral to a Law Clinic, which I had not heard about. 

[fatbelly] I have taken the opportunity for a few free initial consultations, which don't take into account all the facts of the case, but only an over view of the situation and one has said in that declaring I am a 'man of straw' might make them reconsider or go after my ex-partner (who is not communicating to anyone).

[TripleH] The flooding incident I was told had been resolved, in that the drain had been unblocked.  I am still a member of the Facebook group for the estate so do know it has come close to happening again, the road has flooded again causing concerns but no water in the property.  I am sure questions are being asked re the cause of the flooding, but this case is against the information provided to the seller in order for them to decide to buy the house or not.

[Keep_pedalling] That is correct and my feelings as well, they have stated that the whole house needs new carpets due to contamination and walk through to the cost of £10,000.  So that is exactly what they are doing.  I'm sure they feel aggrieved that they didn't ask more questions before buying rather then just plainly making a fraudulent case, but they are defo chancing their arm.  As it seems clear that my bankruptcy will have no effect here (other than using it in a 'man of straw' defence), I will take the post to the housing board.  I am yet to draft any reply to them for fear of saying something in writing I may later regret that adds to their case.  My first instincts were find a a solicitor, I had not thought of defending this myself. 

fatbelly

Mr2018 said:

[fatbelly] I have taken the opportunity for a few free initial consultations, which don't take into account all the facts of the case, but only an over view of the situation and one has said in that declaring I am a 'man of straw' might make them reconsider or go after my ex-partner (who is not communicating to anyone).

That's a nice old-fashioned phrase. I would have thought 'I am an undischarged bankrupt' would have the same effect. They can easily check on the insolvency register.

Keep_pedalling

Mr2018 said:

Many thanks for the replies.  I have now sent of a referral to a Law Clinic, which I had not heard about. 

[fatbelly] I have taken the opportunity for a few free initial consultations, which don't take into account all the facts of the case, but only an over view of the situation and one has said in that declaring I am a 'man of straw' might make them reconsider or go after my ex-partner (who is not communicating to anyone).

[TripleH] The flooding incident I was told had been resolved, in that the drain had been unblocked.  I am still a member of the Facebook group for the estate so do know it has come close to happening again, the road has flooded again causing concerns but no water in the property.  I am sure questions are being asked re the cause of the flooding, but this case is against the information provided to the seller in order for them to decide to buy the house or not.

[Keep_pedalling] That is correct and my feelings as well, they have stated that the whole house needs new carpets due to contamination and walk through to the cost of £10,000.  So that is exactly what they are doing.  I'm sure they feel aggrieved that they didn't ask more questions before buying rather then just plainly making a fraudulent case, but they are defo chancing their arm.  As it seems clear that my bankruptcy will have no effect here (other than using it in a 'man of straw' defence), I will take the post to the housing board.  I am yet to draft any reply to them for fear of saying something in writing I may later regret that adds to their case.  My first instincts were find a a solicitor, I had not thought of defending this myself. 

I don’t see that they have a case and it is interesting that the amount they are claiming is exactly the limit set for the small claims court. 

Have you spoken to your ex about this? You need to put up a united front.