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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3843
Experience:  Solicitors 2 years plus PQE
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I purchased a property at a discount from a relative who did

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I purchased a property at a discount from a relative who did not declare they had debt. What are the implications for me?
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
How much was the discount? Did you have a valuer verify the value?
Is your relative likely to go bankrupt? What relation is this person to you?
Kind regards
Customer: replied 2 years ago.

Discount £57k

Valuer did value the property

Relative is my nephew

He has made an offer to creditor but they are not accepting his offer

Hi, Thank you. There is a danger that if your nephew goes insolvent this could be deemed a Transaction at an undervalue - under s.339 of the Insolvency Act 1986 - if the sale was made at any time in the five year period ending with his bankruptcy. There is nothing the creditor can do about this, the trustee in bankruptcy will have to investigate it and all likelihood one of the following will happen: (i) The trustee will deem any action against you too expensive and not in the interests of the creditors (ii) You will be able to defend the price paid as not an undervalue at all as you used a valuer and the discount took into account a distressed sale (iii) You will be able to negotiate with the trustee and may have to make contribution to stop the trustee taking any action (hopefully won't be £58k) and (iv) You will have an order made against you to either pay the £58K or unwind the transaction.
Alex J. and other Law Specialists are ready to help you
If your nephew does go bankrupt, then I would wait for the trustee to contact you. If the trustee does contact you, put the burden of proof on them to prove the undervalue, do not volunteer too much information until they provide you with evidence supporting their claim. If they do try and make a claim against you, you can then show your valuation as evidence to try and prove the property was not undervalued.
P.S in my previous answer note I meant to write £57k not £58K. My apologies kind regards AJ