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AO writes: It says that reversal of the transaction should be such that it restores the state to how it would have been if the transaction had not taken place.  Well,  from the direction I'm looking, you will not be getting back to the state that you were in had the transaction not occured... it's a physical impossibility!

I haven't read the statute, but my understanding of the above, would be to put BOTH parties in a position were they  haven't incurred loss. Hence purchase costs, improvements etc should also be set against the eventual settlement figure. If this is the case, the eventual settlement figure could be reduced substantially.

Secondly, I'm not certain how it affects this case, but if the vendor has signed a declaration stating that he is unaware of any insolvency issues, and subsequent circumstances show otherwise, then he has effectively attempted to commit a deception. And he may also be benefitting from this crime by this reclamation taking place, because as a discharged debtor/bankrupt he would be elligible for better loan facilities.

Just a thought ( or 2)      

Hi clottie,

The open market value is one area where I have room for negotiation, plus any works and associated costs that may have been done since the purchase.  They have commissioned a drive by valuation and had it back valued to the date of purchase which comes in considerably above my original valuation £185k against £170k.  Realistically they don't want to go court anymore than me as it is time consuming and expensive so we can compromise on a settlement figure.

Hi Mark,

I doubt it will go to the stage of reversal for the reasons mentioned above, plus they are only going for 50% of the equity as it was in joint names and only the husband went bankrupt.  If it did get reversed it wouldn't effect my mortgagability as the lender would be paid back in full from the excess equity.

Hi BTS king,

That's a fair point and I don't know the definitive answer.  I expect the trustee would take possession and sell the property and then pay off the current mortgage lender.  I'm not sure what say the current mortgage lender would have in the whole arrangement.  It is something I may well use as part of my bargaining position though.

 
Hi Riki,

All these points will be used in the final negotiation settlement.  As you say, I would need recompense for all costs associated with the purchase and holding period, also there is an ERC on the mortgage if redeemed so that would further reduce the end nett proceeds of the sale.

I have fully accepted now that this is just a matter of horse trading to come out of this by putting my hand in my pocket as little as possible.  What we all need to look into going forward is how we protect ourselves from this happening in future transactions. 

""protect ourselves from this happening in future transactions. ""

i doubt if any insurer will want to insure any of us against the possibility of a repossessee being made bankrupt by the Inland Revenue  who are notoriously severe with overdue tax bills.   

clottie:

""protect ourselves from this happening in future transactions. ""

i doubt if any insurer will want to insure any of us against the possibility of a repossessee being made bankrupt by the Inland Revenue  who are notoriously severe with overdue tax bills.   

I'm not so sure Clottie, but I think any solution will not be cheap.

I read somewhere at the beginning of the Iraq war about some insurance big shot who was coming out of retirement to provide cover for the tankers sailing in/out of kuwait. Apparently saddam was taking pot shots at them.

My point is if they can get cover for that, then we should be able to get some sort of cover, but I think these policies will be expensive until the risk is better understood.

However something that has yet to be mentioned/discussed is how the mortgage co's will react to these sort of claims if they become more widespread. From their perspective, this sort of risk must be viewed in casu to sub prime. And we all know about that.

 Finally ( for tonight anyway) I'd like to echo others sentiments on the courage paul has shown in  coming out and sharing this problem with us. We are all delighted and share in each others successes when they are declared, but I think it shows real guts to come fwd and admit when something isn't going to plan

Pal:

It seems that if, at any time up to 5 years from the sale, the vendor is made bankrupt then the trustee can come after you for the proceeds if it can be shown to be an undervalue transaction. 

Yes this is correct! I think this is a very important thing to know!!

Personally I would suggest that all BMVers contact all the people from whom they purchased the property, and try to find out if they are having financial difficulties!!  As there are often other solutions to Bankruptcy that can be put into place. This will help to protect your purchase!

Hi Paul,

Thanks for sharing this for the benefit of the commuinity. Risk is something we all need to be aware, it is sometimes easy to get carried away with buying property and forgetting to take a step back sometimes.

Do AQS have anything in place for this kind of thing. Can any associates old or new pass comment?

When developing insurance policies what process do insurance companies go through? Perhaps if we speak to the right person (company) they could commission a risk review of this whole area to see if cover can be provided?

Jon

Hi Jon,

Whilst it is early days in trying to get an insurance product written especially for us, I have been told that the insurance companies are unwilling to write such a policy as they are concerned about the possibility of fraudulent claims.  I assume by this they mean contrived BMV sales just before bankruptcy and then the buyers gets full recompense up to market value.