insolvancy advise beneficial interest

[lillboy]

Hi

is he going to lose his house.

my uncle purchased his propoerty under the councils right to buy scheeme with one of his nephews.

the nephew has now been declared bankrupt. my uncle has recieved a letter from the insolvancy service which is refering to transfer of the interest of the nephew half of the property. i have read the letters and it seems they do not want to evict my uncle but want him to buy the other half.

he has no money and does not know what to do

please could anyone give any advise.

[Guest Zooman]

Unless he buys his nephews beneficial interest the answer is more then likely yes.

 

If the official receiver is handling the bankruptcy, he should contact the official receiver. They may be able to take part in a property conveyancing scheme run by The Insolvency Service and a firm of solicitors.

 

Under this scheme, the beneficial interest can be transferred back to him, or the beneficial interest.

 

Please note they will have to pay:

 

For a solicitor or licensed conveyancer to act for them in the transaction;

• £211 (as at August 2005) to cover the official receiver's legal costs. This amount must be paid in advance. It includes an allowance for expenses that may be incurred in the transaction. If the allowance is not fully used, they will receive a refund;
  
• the cost of an independent valuation unless you already have a very recent independent valuation of the property;
  
• the agreed purchase price for the beneficial interest based on the valuation. If your home is now worth less than the amount you still owe on it, the price of the beneficial interest will be set at £1.

They will also have to give the official receiver up-to-date details in writing of the amounts that would be needed to fully pay off the mortgage and any other charges on the property.

 

If your husband, wife, partner, relative or friend cannot afford the costs of the scheme at present, they may still be able to take part later. They should contact the official receiver about this.

 

If, later, they approach the official receiver to buy the beneficial interest, and the property has increased in value, the purchase price is likely to be more than £1.

 

If the home is mortgaged, the lender may have to agree to the sale - the solicitor or licensed conveyancer dealing with the transaction will be able to advise on this.

[Guest Zooman]

What is beneficial interest?

 

 

House Value

 

Open Market Value £100,000

takeaway

Money Secured on the House.

 

Mortgage £50,000

Secured Loan £20,00

 

Total Money Secured on the House £70,000

equals

Beneficial Interest

 

House value takeaway Total Money Secured on the House = Beneficial Interest.

 

£100,000 - £70,000 = £30,000

The £30k would be between all the owners so in the eg above 2 owners would mean each have a Beneficial Interest of £15,000 and this is what the Insolvency Service will look to recover to realise their interest in the property.

[lillboy]

as far i i know the realistic value of the property is around 90K

his mortgage is for 34K with 1.8K in arrears, with a court hearing set for later in the month

 

90-34-1.8 = 54.2

 

therfore the insolvany firm would want £27,100 from my uncle.

plus he would have to pay the outstanding mortgage.

 

looks like he will be looking for a new council house.

[Guest Zooman]

Hi options are this:

 

1. Get someone else to buy his nephews beneficial interest and own half the house.
   
2. Rise £27k from a loan (possible a second charge).
   
3. Remortgage at £65k to cover all areas.
   
4. Contact IS and inform them he wishes to sell the house and put it on the open market and walk away with his share of the beneficial interest (27k) in his pocket.
   
5. Do nothing and let IS sell the house and bear the costs he will get a chq for his beneficial interest but IS is famous for selling under value to get a fast sale.

[lillboy]

Hi All

It now appears that the nephew only has an interest in 30% of the property, but has failed to contribute to any of the mortgage payments for 6 Months, My Uncle is going to Seek legal advice on whether or not he has any claim to any of the property due to not making any payments. my uncle has contacted the bank to arrange to pay back the arrears in mortgage payments.

 

The letter from the Insolvency Service does not State a specific percentage of ownership should my uncle make a statement in the letter of achnowledgment of thier letter.

 

Thanks LillBoy

[chopperclaire]

Hi

I am a Conveyancer and would advise you to get your uncle to obtain advice from a Solicitor asap.

When they purchased the property they would have stated how they were to hold the property, there are three way of doing this - Joint Tenants 50% share to 50% share, where if one person dies the share automatically vests in the other owner, Tenants in Common - 50% -50%, however upon the death of one party the share can be divided by way of a will, or Tenants in Common in unequal shares, where one person owns a higher percentage of the property. Also if one person had a higher interest in the property or put more funds in to purchase then a Declaration of Trust should have been drawn up, to cover the person who had invested more, to secure those additional funds.

The problem with a joint mortgage is that both parties are liable for payments, however if one person fails to pay then the second person is still liable.

It may be worth contacting the Solicitors who acted at the time of the purchase to obtain a copy of the documents so your uncle knows his legal stance.

 

Do go and obtain legal advice however.

 

Hope he manages to sort it out.

 

Claire