What are the legal issues purchasing a repossession?

by Readers Question

10:41 AM, 3rd January 2017
About 2 years ago

What are the legal issues purchasing a repossession?

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What are the legal issues purchasing a repossession?

We are purchasing a repossessed residential property in Gloucestershire and have engaged a solicitor I haven’t used before (the previous two were hopeless). This latest solicitor is also less than impressive thus providing motivation for this thread.repossessed

I would like to know what legal issues we should be looking out for in a repossession purchase (that may differ from a usual vendor sale) to ensure they are properly dealt with.

We understand that we accept the property ‘as is’ and our solicitor should ensure the title is clear… how do we know if they have done this properly and there are no further debts on the property that we could be saddled with?

If things like council tax haven’t been paid could be be liable for them?

The property is freehold, but has access to communal grounds that it has a share in. There are no debts owed to the management company. It is not currently lived in. Any other advice will be gratefully received.

Thank you

Sunny



Comments

Ian Narbeth

11:59 AM, 3rd January 2017
About 2 years ago

I suggest you change solicitor if you are not happy with the service/competence of the person you are dealing with. I don't know what fees you are paying but cut-price fees mean that inexperienced juniors handle many conveyancing matters. They can handle straightforward sales and purchases but may not have experience of insolvency-related cases.

Issues for you to consider. You are unlikely to get any sensible replies to enquiries or property information and will have no come-back against the seller if there are problems. Contact the management company/manager to glean as much information as you can about the property. Inspect the property extra carefully. Gas and electrics should be checked as they won't have been serviced.Talk to the neighbours to see if there are any neighbour disputes, boundary issues or other problems with the house or its occupiers.

Unless the property is currently vacant I would ask that vacant possession is obtained before you exchange or else ensure you can pull out if the property is damaged between exchange and completion (disgruntled owners may deliberately damage it when they leave).

You should take out insurance in case of a claim that the property was sold at an undervalue. This will save you a lot of hassle if a claim (even a spurious one) from the dispossessed owner arises and may also be required by some mortgagees.

You will not be liable for unpaid Council Tax and any debts that attach to the property will be discoverable by searches. However the property may be blacklisted by credit reference agencies and this may affect your/your tenants' ability to take out loans until the change of ownership is explained.

You may have aggravation with unpaid utility bills so ensure the meters are read and figures reported to the suppliers. You may be able to discover which utility companies currently serve the house from unopened mail at the house.

Generally, you should expect some extra hassle and to spend a bit to sort out problems.

Property Wannabee

13:50 PM, 3rd January 2017
About 2 years ago

"However the property may be blacklisted by credit reference agencies and this may affect your/your tenants’ ability to take out loans until the change of ownership is explained."

This SHOULD NEVER happen. Though you can get blacklisted by specific lenders.
Credit Reference Agencies have to key all searches on your name. So unless you happen to share a surname with the previous bankrupted occupant Equifax / Experian should give the all clear.

Equifax and Experian are not allowed to use information about Mr Smith against an applicatoin from Mr Jones unless there is proof (shared account) that they are linked.

However Barclays or RBS etc can check their own accounts against the address, and if they see a bad history there will be cautious / may refuse. So if that person defaulted with Barclays you may struggle with Barclays but be OK with another bank such as Halifax.

terry sullivan

13:55 PM, 3rd January 2017
About 2 years ago

who is vendor?

if eg mortgagor in possession/ or official solicitor? or police? etc

S Somerset

14:06 PM, 3rd January 2017
About 2 years ago

Hi Ian,

Thanks for your valuable feedback!

We have actually done most of the above: been to the property plenty of times, had the electrics / plumbing checked, had surveys done, spoken to several neighbours etc.

I hadn't known about / considered insurance. So thank you for that point. We do have a clause that if we sell within a year the vendor / lender will get any uprise in value. We don't intend to sell for many years so don't see this is an issue.

We are insisting on vacant possession. It's not currently occupied by any people (they have been locked out from even visiting), but has possessions that still need removing (it hasn't been lived in permanently for many years). Once this is done (and inspected) we will proceed.

Thanks again!

Property Wannabe - thanks for that information. It isn't something we're too worried about. We currently live in a house where the previous person has lots of people chasing them - and it hasn't impacted us.

Terry: Mortgagee repossession

SS


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