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I read/saw/heard somewhere that if a vendor sells BMV and there is an unsecured debt on a property, it is possible for the company who is owed the money to force the BMV'er to pay the debt.

 I tried serching in SP but couldnt find - though I thought I read it on here -

Ta

Nigel.

Hi Nige,

If the debt is unsecured then there is nothing to be seized to secure this debt.  No one can be chased for the debt other than the person responsible for it who took it out, unless someone else signed as guarantor.

If the debt is secured then it should have been cleared on purchase as you need clear title to transfer ownership. 

Nigel

If I have got the correct gist of your post, do search for "indemnity".

 Jason

 

Hi Nigel, I asked the same question to my solicitor, if someone sold BMV and they declare themselves bankrupt, what protection do I have so the debtors don't come after me.

This is their reply:

With regard to your query of what would happen in the event the Vendor was to become bankrupt, I confirm as follows:

We will take out an indemnity policy to protect your lender.  If the Seller is made bankrupt after the property has been purchased the lender will be protected.

There is a chance that you may lose the property, unfortunately there are no policies that we can take out to protect you.  Alternatively you may be given the opportunity to pay the difference between what you paid for the property and the market value.

WHY PROTECT THE LENDER? I NEED PROTECTION NOT THE LENDER! As such, currently I am avoiding their services and in search of another solicitor who can take out an indemnity insurance to protect me. Why do I want to pay the difference in the purchase price and market value? Go through all these to pay market value?

Will do a search for indemnity as suggested by Jason.

Regards

Cheong

Cheers Pal. I thought that I'd read something about if the person goes bankrupt, then the insolvency practitioner can, theoretically, ask the BMVer to cough up the balance between OMV and BMV.

Ardent - had a search and couldnt find anything that answred the Q.

JCC - yea - great just what you didnt need - though if the lender is covered, then I assume you will be for the mortgage amount by default as the money is basically the lenders.

N

Sorry Nigel, I didn't realise you meant if the vendor later goes bankrupt.  Indemnity insurance is the way to go on this if you feel that the vendor is reaching this position. 

Alternatively, if you get an initial 'red book' valuation showing the value to be close to what you are paying, that can be a very good defence. 

Hi Paul,

So will your packaging service include solicitors who will offer me an indemnity insurance if he/she feels that the vendor may be heading for bankrupcy? The solicitor I asked told me they will cover the lender and not me? And why am I paying the solicitors for then? So hopefully your solicitors are more in the know!

 Regards

Cheong

I have always assumed the policy was directly to cover me.  I will check this fact Monday morning but as far I know the indemnity policies are set up this way.  My understanding is that they pay out the shortfall between the BMV purchase price and any agreed OMV to the lender who then has no further claim against you.  Perhaps the fact that this money is paid to the lender is where the confusion arises.

Still best to check though, which I will do Monday.