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Nicola-mod
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Category: Bankruptcy Law
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I am not sure if this will have any baring on how long the

Customer Question

I entered into bankruptcy 2 years ago and have been discharged for 1 year 


 


 I am the sole owner of the property


 


I have what is considered a second home as at the time of the bankruptcy order  


however I explained that my family home was my 2nd home and it was noted on the insolvency site that I was formerly residing at my second home.


 


I am not sure if this will have any baring on how long the Official Receiver will have an interest in this property ?


I have valuations and there is no equity in either property.


My beneficial interest and I assume the legal title transferred to the official receiver This appears on the the property register. (28.09.2011) BANKRUPTCY NOTICE (04.10.2011) BANKRUPTCY RESTRICTION


As I have mentioned there is no equity in the property.


I am concerned about the costs in this situation especially stamp duty.


Also the complications in buying out the official receivers interest.


I have been told that a relative or friend may be able to buy my beneficial interest in the home, that this will stop the official receiver or trustee selling my home later?


However I am also told that If the property is solely owned the transaction is more complicated because the legal title, as well as the beneficial interest, must be transferred?


I am told anyone wishing to buy back the trustee’s interest in my property may become liable for Stamp Duty Land Tax?


Would the mortgage company agree for my relative to buy the beneficial interest? Would my relative have to have the be mortgage transferred into their name?

Submitted: 3 years ago.
Category: Bankruptcy Law
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your question and welcome. My name is AJ and I will assist you.

The issue here is you are still the legal owner of the property. The trustee has a restriction registered against it to let anyone know that it forms part of your estate in Bankruptcy. A third party (or yourself if your funds come from your estate after discharge) can buy the beneficial interest back off the trustee.

If you buy it then you will still be the legal owner of the property and therefore no transfer would have occurred capable of incurring SDLT. If a third party buys the property then this will be a legal transfer and accordingly SDLT will be charged.

If a third party lends you the money to buy the interest then again you are still the legal owner.

If you are only transferring the beneficial interest, then in theory you would not even need to tell the mortgage company as such a transfer would not have any effect on their security.

Can I be of any further assistance?

Kind regards

AJ
Customer: replied 3 years ago.

Thank you for getting back to me. I have read this on one of the sites and it has confused me.


Dear X,



We act for the Official Receiver in connection with the transfer of property 'X' back to you. We are instructed that the consideration to be paid by you is £X and that you have paid the sum of £X on the account of our costs.

As the property is solely owned, both the legal and beneficial interest vest with Official Receiver. You will therefore require the services of a solicitor to obtain the consent of the mortgagee, deal with the completion and submission of any Stamp Duty Land Tax Return required and register the Transfer at the Land Registry. Until registration of the Transfer the property will remain vested with the Official Receiver and the legal formalities not concluded.

If you intend to act for yourself, please note that you are responsible for the matters set out in the second paragraph of this letter. As we act for the Official Receiver only, we are not able to advise you on the implications of any documents we send you, nor assist you in carrying out any of the steps outlined above.

Please advise us of your solicitors' details in order that we may forward the Transfer to that Firm.


 


So here are some questions


As I am discharged can I buy back the interest on my second home ?


Would the official Receiver sell his interest on a 2nd home?


How recent would the valuation have to be?


Would I need a solicitor as well?


Do you know what the Official receiver would charge as I seem to have heard its about £1,000 plus legal costs.


Would it be a very intense prolonged procedure


 

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

1. Yes you can buy the interest back;
2.Yes the OR would sell the interest as it would be for the benefit of the creditors;
3. I would recommend a valuation as recent as possible. As it is only a beneficial interest in a property that is negative equity then, if the price you pay is less than £100k there will be no SDLT anyway. That is why the valuation should ideally be as up to date as possible;
4. I would recommend you use a solicitor if anything to ensure that the OR's restriction is removed;
5. It is difficult to say what their costs would be, but I would suspect less than £1000;
6. No it should not be prolonged as long as you can agree a price with the OR. This should not be difficult if the property is in negative equity, it should have relatively little value and to dispose of it would benefit your creditors.

Kind regards

AJ
Customer: replied 3 years ago.

How long does the official receivers interest stay on the 2nd home?


 

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Technically for ever because it forms part of your estate in bankruptcy so is for the benefit of the creditors.

I think it is safe to say that they will look to close their files as quickly as possible, so if they have not had any offers in two years and you make an offer, they will probably accept a very reasonable price just to get rid of the burden.

The mortgagee could also seek to enforce its security as well.

Kind regards

AJ
Customer: replied 3 years ago.

I called the RTLU and they said the file is no longer with them, it was back with the Official Receiver. I called the OR and they said the file is closed and the property would revert back after 3 years?


Could this indicate that they have accepted it as being my family home?

Expert:  Alex J. replied 3 years ago.
Hi

Thank you.

If they are prepared to remove the restriction after three years then I would not question it.

My best suggestion would be to contact an insolvency practitioner - normally an account and see if they can write to the OR and get them to agree a release as soon as possible.

Kind regards

AJ
Customer: replied 3 years ago.

Would I be right in assuming if they say the file is closed and that nothing being done with the property, that it would be my whole file and all it included?


 


I don't really want to keep contacting them


 

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Yes that is correct, however you will need them to remove the bankruptcy restriction. You could potentially do this yourself at the Land Registry but it could take longer.

If the property is negative equity they may well have disclaimed it under S.318 of the Insolvency Act.

Can you tell me why the mortgage company have not enforced their charge? Are you still paying the Mortgage?

Kind regards

AJ
Customer: replied 3 years ago.

Yes, I am still paying the mortgage in full every month I wasn't aware that the mortgage company do anything? Is this something they can do?

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

In theory bankruptcy would be an event of default. The fact that you are still servicing the mortgage means that they have probably decided not to enforce the charge.

I would suggest you obtain a valuation from the property if you can, at least you will then know if it is worth anything or if it is negative equity. If it is in negative equity the trustee is less likely to take any interest in it.

If the trustee has closed their file, you can then look into having the bankruptcy restriction removed from the property to see if you can be left as the unencumbered legal owner.

Kind regards

AJ
Customer: replied 3 years ago.

I had a valuation by a chartered surveyor and the property is is negative equity. I am now assuming that is why my file was sent back from the RLTU to the official Receiver.


 


The lady I spoke to at the Official Receivers office seemed to indicate it was an automatic process in 3 years? although I have heard it can be less than that 2 years 3 months? I just don't want to push it with them.


Is it an automatic procedure that the restrictions will be removed in that time frame? or would I in any event have to initiate the removal?


 

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

I am afraid you will need the OR to revest the property back in your name free of the restriction which will require a transfer or you can apply under the Land Charges Act 1972 to have an order that the registration in the OR's name be vacated and the property returned to you. The property vested in your estate in bankruptcy which is no longer part of your current estate.

Kind regards

AJ
Expert:  Alex J. replied 3 years ago.
Hi,

Can I be of any further assistance?

Kind regards

AJ
Expert:  Nicola-mod replied 3 years ago.
Hello,

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Thank you,
Nicola

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