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JGM, Solicitor
Category: Law
Satisfied Customers: 12183
Experience:  30 years as a practising solicitor.
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We sold our house at full market value in March 2009, to my

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We sold our house at full market value in March 2009, to my brother, to raise money to maintain our business and home life, during the recession. He rented it back to us and we have lived there ever since. The property is held in trust to us, me and my husband, obviously, my brother is the legal owner. Unfortunately we found that our debt is unmanageable and declared bankruptcy in September. The official receiver is questioning the sale of the house and we are concerned that the sale or the trust can be overturned. Please advise, many thanks
Thank you for your question.
If the house was sold at full market value, what is the official receiver questioning?
Customer: replied 3 years ago.
She is asking for copies of the completion sale, copies of trust deed, who lent the money ( as it was sold by part mortgage and private family loan to my brother) copies of valuation , what the valuation is today, what is outstanding on the mortgage. I thought because it was sold over 5 years ago the sale couldn't be brought into question. Many of these questions are to my brother, as the owner of the property, obviously he is very concerned
I agree with you. Given that there was no undervalue and that the transaction was more than five years ago, I see no reason for these enquiries.
There is no breach of the Insolvency Act 1986. You can read online section 339 et seq.
Customer: replied 3 years ago.
Does it make any difference that the house was paid for by my brother from a standard mortgage and family loan, but has not paid any of the family loan back yet. Our rent covers the mortgage payment. Can they put a restriction on the house because of the trust deed?
No, how he bought the house is irrelevant. The official receiver can only be concerned about your actings, not his, but in any event after five years there is no issue that I can see from what you have said.
Customer: replied 3 years ago.
Do you have any thoughts why the OR is asking all these questions
Probably ticking boxes!
Customer: replied 3 years ago.
Do we have to prove we have been paid the difference between the outstanding mortgage (when we sold the house) and the valuation. We don't have statements from that far back and some was paid cash. And do we have to prove how it was used.
In my opinion no. All you have to do is establish when it was sold and for how much. A letter from your solicitor should suffice.
Customer: replied 3 years ago.
The solicitor who dealt with sale only dealt with the mortgaged part of the sale £97k and the balance was paid from the private loan from a family member...they paid the balance into our account over a2 year period. The completion statement states the sale price of the house as£97k as we didn't need him to deal with the private loan does this matter
You've just answered your question about why the official receiver is asking about this! On the record this is a transaction under value even if cash was paid in addition. The Land Registry will show the price as being £97K.
However, you are probably OK because of the five year rule. However it's not that much over the five year period so I can understand now why this is being investigated. I suggest cooperation on the basis that it will be easier to satisfy the OR and get rid of this quickly. I still don't think you have a problem but that is why questions are being asked.
Customer: replied 3 years ago.
The land registry does state the sale price as the full valuation £165k, the OR has a copy of the valuation which also states £165k but she has requested a copy of the completion statement from the solicitor, which states £97k, as I said he didn't deal with the private loan. the OR hasn't received the completion statement yet. Is this going to cause even more problems once they get them. The OR is aware that the house was paid for by 2 different methods, mortgage and personal loan
You'll need to provide evidence of the private loan.
Customer: replied 3 years ago.
What evidence will we have to supply. It wasn't us who took out the family loan. My brother and family member have a written agreement between them but we don't have anything. The family member says she can provide some transactions of the payments made to us
I thought it was your brother who was being asked to produce paperwork. He can presumably produce the written agreement?
Customer: replied 3 years ago.
We are being asked to provide a completion statement from the solicitors who dealt with the sale. Which we haven't yet and are trying to establish when we do what will happen next as it states the sale price was £97k, but this is incorrect. Yes my brother can provided the agreement between him and the relative
That's why you'll need the completion statement and the other agreement to establish a total price of £165.
If the transaction was within 5 years of the bankruptcy I would have to advise you that this would be treated as a fraud on creditors. Because it is outside that period you should be OK as I have already said.
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Customer: replied 3 years ago.
Many thanks for all your help