Buying a property from someone going bankrupt - risks?

[Hahh2912]

Hi,

We are thinking of buying a proprerty. We have been told by the estate agent that the current owner is either bankrupt or being filed for bankruptcy (sorry I can't remember which).
Does this present any risk to us buying it? I don't know if we could potentially get a bargain or if we shouldn't be touching it with a bargepole?

Thanks,

[Catso]

If the sale was correctly and competently carried out, I can't see why it would be any risk to you. You'd just have to be especially careful that the property wasn't used a security against a loan or similar. IE that it was, completely, his to sell.

[PaulB]

Normally the Trustee in charge of his bankruptcy would be selling his house for asset purposes.

As Catso says, make enquiries as to who the house belongs to first eg: the bankrupt guy or his trustees.

[what..the?]

As the owner or part owner of the house has or is filing for bankruptcy then the house is the responsibility of the Offical Receiver (OR) or a Licensed Insolvency Practitioner(IP) who is the bankrupts "Trustee in Bankruptcy," both these people are appointed by the government to realise the bankrupts assets to pay his/or hers creditors.

When the bankruptcy is formalised control of the house is passed to either the OR or the IP. Which means the estate agent will be in contact with OR or IP to inform them of the current situation with the property.

Quite often a house is jointly owned by a married couple and the house is in both names therefore it is offered to the "other half " to buy their partners share in the house. Otherwise the house is put to auction or put on the market and the money owed to the "other half" is paid to them at a later date.

If the bankrupt is a 'nasty piece of work' it may cause some problems for you in buying it - he may damage the property as he feels what is happening to is wrong, he may also delay you moving in the property if he refuses to move out. There is often alot of court appearence which may also delay matters.

But there are the benefits like you say - a bargin. As at times Trustees just want to get the property off there hands due to over damanding creditors and abusive bankrupts, so wanting to close the case and move on. Finding out the details of the Trustee and possibly contacting him about the house maybe a good idea. The Estate agent maybe able to tell you or as this man sounds like he has been made become bankrupt recently you local Offical Receivers office maybe able to help you contact the Trustee, but you would need the bankrupts full name and possibly alo the court number from his bankruptcy.

For website with infomation on bankruptcy search for - 'The Insolvency Service'

[themas]

If the seller is not already bankrupt then he/she is perfectly able to sell the house. The solicitors would make sure any mortgage or charge on it was removed from the title when you bought it. (Even if the sale proceeds did not fully clear the mortgage or charge this would happen, and no-one would be able to come after you in relation to it.)

However, if the seller disposed of the house at below its market value the Official Receiver (once he is made bankrupt) could investigate and even has the power to undo the transaction. This is unlikely to be relevant in your case (it is more aimed at people deliberately putting assets out of the reach of their creditors) but it would be wise to get confirmation from the agents that you would be buying at market value.

[Hahh2912]

Thanks for all the responses. I think we have to do a bit of thinking on this first. It has only just come back on to the market so we hopefully have a bit of time.