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I was made bankrupt on 1st september 2010 and we are still discussing about the property. The property is the family home where I live with my parents. We bought it from the council with 58% discount earn't through my parents rent and it was originally bought between the three of us, mum dad and me. When we re-mortgaged for an extension the mortgage was put into my name on a verbal agreement that I paid the mortgage my parents paid the bills. My parents made an offer through a soliciter of £1 plus costs for the equity based on the facts that all the debts are in my name so my share of the equity would be negative once there share of the property had been taken into account. The receiver said no to the offer and sent through a statement saying that they valued the property at so much and when the outstanding mortgage and secured loan balance was taken away it left £20,000 equity. I supplied various statements showing my parents contributions and left them to inspect them. I have received a letter today asking if they can do a more thorough valuation. My question is this does anybody know if they can re-value after they have already placed a request upon the table as it were. The re-valuation might work out better or worse for me but the issue first is if I let them re-value am I letting them get out of there original demand or should any negotiations be based around there original valuation. I know either party isn't allowed to delay things to allow the market to favour them and I certainly don't want to null and void anything that is already in place. Any thoughts would be gratefully received.
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Re: bankruptcy and property
BUMP for more advice.. ****URGENT**** -
Re: bankruptcy and property
You could contaact the Bankruptcy Association for more specialist adviceComment
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Re: bankruptcy and property
Is it correct that the property is now (following the re-mortgage) in your sole name? Do your parents retain any legal interest in the property? Was any legal document drawn up between the 3 of you at the time you re-mortgaged? Can you tell me the date of the re-mortgage?
Sorry to throw questions at you but if you post answers on the thread, I'll try to help.Comment
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Re: bankruptcy and property
The deeds are in my sole name and I am unsure what they signed but they were very basic consent forms which we never had copies of. Before I was made bankrupt I had some advice from an insolvency company about my position and whether I should try for an IVA. They explained that the original mortgage was only for 42% of the property as my parents already owned 58% through their discount. They went on to say that because the secured debt was in my name (Abbey mortgage and dreaded Swift loan) my actual share would be extremly negative due which has been proven and won in previous cases. Unfortunatly any agreement was verbal between me and my parents and it was that I would cover the mortgage and they would pay the living expenses. I know that if they were chasing my parents for money they would ask for a proof of sale before they would let them go but there as never been a sale of any of the property. The insolvency firm made on offer of £1 plus costs on behalf of my parents which was duly dismissed by the receiver. This action cost my parents £500 and they then got dates wrong in their submission. The receiver then sent a valuation of the property with what they calculated to be the equity (ABOUT £20,000) and threatened that they were now in a position to ask for possesion. The extension that was built with the re-mortgage as not been completed and signed off and I am not going to do anything with it until we know the property is safe. I have explained this to the receiver and the fact that this makes the property un-mortgageable hence prey for the cash only discount buyer. So the way I look at it even if there was £20,000 equity on paper by the time sale costs had gone through and reduced sale price due to cash buyer there would be very little equity left and a legal fight for possession and or re-housing of my parents even before there was a discussion about there share. The remortgage was in 2002 and the secured loans was after that and remembering that my parents still had to sign consent forms for these.Comment
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Re: bankruptcy and property
Thank you for explaining the position with regard to the deeds and the remortgage. The secured loan is a second charge, which normally is an unwanted liability but in this situation is an advantage because it reduces the equity in the property. It's the amount of equity that's the issue here, and I don't think the receiver would ask for a second valuation unless he thought it would benefit him, so tread carefully. Why not see if you can get your own valuation (the true value of the property in its current condition with unfinished building work) so you know what the downside is? You may be able to get this informally by talking to a local estate agent; you may have covered this already, I'm just thinking aloud.
The receiver thinks there's at least £20,000 equity in the property, and is hoping it will be more. You have to negotiate that amount downwards. It will cost the receiver money to commence proceedings for possession. Solicitors will have to be paid as will court and other fees. Spending money is not something receivers like doing and in my experience if they can do a reasonable deal they will, and not hang in there for top money. If they have to take possession proceedings, and succeed, they then have to employ agents to sell, and that's not cheap. They may well be looking at total costs of sale in the region of £5,000, and as you rightly point out the unfinished nature of the extension will put off a lot of potential buyers, so the property could be on the market a long time. They might accept this and take £15,000 as their starting point for the equity. You must try and persuade them that it's actually a lot less.
Keep them talking, take legal advice, get your own valuation report, do whatever you have to, but stall them for the moment. I trust your mortgage and secured loan payments are on an interest-only basis, as this means you are not increasing the equity every time you make a payment. I think you will have to make them a higher offer eventually, but keep emphasising the cost, delay and hassle to them of doing it the hard way and you might get somewhere. Even receivers want to close a case and move on. After all, they don't get any fees themselves until that happens. I've known plenty of cases where receivers have settled for below the going rate in terms of equity, as long as there was enough money on the table to cover their own professional fees.Comment
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Re: bankruptcy and property
bumpedComment
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Re: bankruptcy and property
Update, had them out to value but made sure I pointed out everything that is bad and makes the property un marketable. Upshot is a valuation smaller than the drive by and a long list produced on the problems and costs involved in forcing sale. They are asking for £2000 for full and final settlement and even though I feel they would get less if I pushed them to go the legal route I feel I will find a way to settle so I can move on. Next step will be the Swift secured loan which is a bigger fight.Comment
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Re: bankruptcy and property
£2,000 is a lot better than £20,000, so well done there. Try pleading poverty and offering them something less, although I suspect £2,000 may cover the receivers' costs nicely. Still, nothing to lose by making a low offer.Comment
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Re: bankruptcy and property
Thanks for the reply and assistance Nikolai, I feel I could get them lower but my parents would prefer we found the money somehow and get it ended. Will have to contact the receiver to find out if that is all or wether there will be a requirement to have the deeds altered which wil carry a cost as well especially as it cannot be done when the mortgage is in arrears.Comment
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