Property Auction Purchase - Issues with Charges & Restrictions

the_baron26

Hi guys,

Looking to potentially purchase a property at auction next week but I'm having real issues after reading over the legal pack. The property is being sold by the mortgagee in possession with a tenant in situ on a holding over rolling contract.

Everything seems pretty standard from what I can see and the searches appear satisfactory, however there's something on the title that I spotted and no one seems to be able to give me an answer. The title tells me the following under the Proprietorship Register:

-------------------------------------

1. 
   (10.11.2008) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate is to be registered without a written consent signed by the proprietor for the time being of the Charge dated 18 January 2008 in favour of Hanley Economic Building Society referred to in the Charges Register.
2. 
   4 (01.10.2010) RESTRICTION: No disposition of the registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction, is to be registered without a certificate signed by the applicant for registration or their conveyancer that written notice of the disposition was given to The Governor & Company of the Bank of Ireland at c/o Hill Dickinson LLP, No. 1 St Paul's Square, Liverpool L3 9SJ (Ref: ********), being the person with the benefit of an interim charging order on the beneficial interest of <proprietor> made by the St Helens County Court on 22 September 2010 (Court reference ********).[/quote]

-------------------------------------

There is no entry on the actual Charges Register related to this Bank of Ireland interim charging order. Only the Hanley Economic Building Society (who is the mortgagee in possession.) So far I've tried the following:

• Called up St Helens County Court to see if the case details were public information, they told me any records from 2010 wouldn't be accessible now as they don't go that far back. They then told me to contact the Land Registry for more information.

• Land Registry told me they couldn't divulge any specific information but that the charging order was for a 'large sum of money'. They advised I should speak to Hill Dickinson LLP

• Hill Dickinson LLP confirmed that they did act for the Bank of Ireland in obtaining a charging order on the property but couldn't advise further. They then told me to contact the seller's solicitor listed in the legal pack.

• Seller's solicitor told me they couldn't give any information due to a conflict of interest but to contact the auction house for more information on this.

• Auction house sent me the following email:

-------------------------------------

I understand in repossession sales charges/restrictions that postdate the mortgagee in possession charge fall away when the new buyer registers.

I attach the relevant Land Registry practice guide, which outlines how the Land Registry approaches applications for registrations of properties sold by mortgage lenders.

You will need to rely on your own advice here, I believe if you have a solicitor look at the pack for you they will verify that this charge which post dates the mortgagee charge will fall away when you register the purchase.

-------------------------------------

I then forwarded this email to my solicitor to have a look at, along with the legal pack. They replied with the following email:

-------------------------------------

With regards to the email from auctioneers, their repsonse is not correct, as the restriction is not Hanley Economic Building Society, it will not be automatically removed.

I have spoken to HMLR who advised they will need a certifacte from Bank of Ireland of the written notice as per wording of the restriction of the title.

It is tied to the property, however no certainty you will not get hidden surprises. Once completed it will become the buyers responsibility to pay.

It is usually the sellers responsibility to cover all costs, however as it auctions there maybe certain clauses which means they do not clear any debts on the property, I would ensure you are satisfied with the auction contract before committed to anything.

-------------------------------------

I'm totally confused by all this, as clearly someone is giving me incorrect information and I don't know which one. Is there any way I could get this query confirmed with certainty as I feel like I'm banging my head against a wall trying to ascertain what should be simple and straightforward information? The auction is in the next few days so I really need to find out one way or the other ASAP.

My huge concern is that I don't want any outstanding debt to become my responsibility if I buy the property or for this to cause any issues when I sell the property later on. I have no idea how it all works though as it's my first time at auction.

Can anyone here advise on this?

Many thanks.

eddddy

the_baron26 said:

 Is there any way I could get this query confirmed with certainty...

Given the timescales, I suspect that the bottom line will be... if you want certainty, don't buy this property.


In theory, a property like this might be bought cheaply by somebody who's happy to take a gamble and they might end up winning or losing the gamble.

But there may also be people at the auction who didn't read the legal pack properly, and bid higher because they don't realise it's a gamble.

the_baron26

eddddy said:

the_baron26 said:

 Is there any way I could get this query confirmed with certainty...

Given the timescales, I suspect that the bottom line will be... if you want certainty, don't buy this property.


In theory, a property like this might be bought cheaply by somebody who's happy to take a gamble and they might end up winning or losing the gamble.

But there may also be people at the auction who didn't read the legal pack properly, and bid higher because they don't realise it's a gamble.

Thanks. I'm thinking along similar lines.

Would it be typical in an auction sale for the buyer to assume any debts linked to the property, or do they usually stay linked to the seller after completion?

loubel

Use a different solicitor. The auction house are correct. The property is being sold by the first lender with a charge and the 2nd restriction will be removed on completion.

RHemmings

So good to see that the OP is asking this question now, not after bidding and winning. (As has happened on this forum before.) 

Grizebeck

RHemmings said:

So good to see that the OP is asking this question now, not after bidding and winning. (As has happened on this forum before.) 

Act in haste repent at leisure

the_baron26

loubel said:

Use a different solicitor. The auction house are correct. The property is being sold by the first lender with a charge and the 2nd restriction will be removed on completion.

Interesting thanks. So even if the restriction was removed from the title upon completion, could the creditor (Bank of Ireland) still chase me for the money without the interim charging order registered? Would I even be liable given it's an auction purchase?

the_baron26

I should add that the terms of sale stipulate that the property is sold with all encumbrances listed in the title, with the exception of the charge listed in the Charges Register from the mortgagee in possession. As shown below:

---------------------------------------------

C: Charges Register
This register contains any charges and other matters that affect the land.

1.  1       (10.11.2008) REGISTERED CHARGE dated 18 January 2008 affecting also
           other titles.
   

           NOTE: Charge reference ********.
   

2.  2       (10.11.2008) Proprietor: HANLEY ECONOMIC BUILDING SOCIETY of Granville
           House, Festival Park, Hanley, Stoke-on-Trent ST1 5TB.
   

3.  3       (10.11.2008) The proprietor of the Charge dated 18 January 2008
           referred to above is under an obligation to make further advances.
           These advances will have priority to the extent afforded by section
           49(3) Land Registration Act 2002.
   

---------------------------------------------

The Bank of Ireland interim charging order isn't even listed in the Charges Register at all, oddly enough.

user1977

the_baron26 said:

loubel said:

Use a different solicitor. The auction house are correct. The property is being sold by the first lender with a charge and the 2nd restriction will be removed on completion.

Interesting thanks. So even if the restriction was removed from the title upon completion, could the creditor (Bank of Ireland) still chase me for the money without the interim charging order registered? Would I even be liable given it's an auction purchase?

Don't think so. But you shouldn't be bidding if you're not comfortable with the quality of your legal advice...

the_baron26

I think that's the problem - that I've received so much conflicting advice. To be honest I've probably had much more in depth advice and knowledge given through online forums than I have from official channels where you'd expect they could advise with a high level of authority and certainty.

I've got no idea if my solicitor is giving me incorrect information and they haven't been fully instructed as yet - I've just used them previously on a house sale, so if anyone else has anything to add here (or feel free to drop me a PM with a recommendation for a good auction property conveyancer) then that would be a big help.

propertyrental

My advice is to set yourself a very low bid price, and if the bidding exceeds that, then drop out.

If no one bids beyond your very low price - great. You could bag yourself a bargain (though still with some risk).