Author Topic: Buying Beneficial Interest  (Read 4914 times)

AndyP

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Buying Beneficial Interest
« on: Dec 31, 2012, 09:37:25 AM »
 Hi,
I'd be grateful if anyone can offer advice/info regarding the process of buying the beneficial interest in my property (from the OR).
I was declared bankrupt five months ago and the only asset I have is the property I own and live in.
At the time of bankruptcy my property was valued at £176,000 with an oustanding mortgage of approx £146,000.
A friend is willing to help me but is only able to raise around £15,000
I wrote to the OR offering £16,000 and stated a case that although the property had been valued at £176,000 the amount that would be realised from a sale (after fees/costs and taking into account reduction to achieve a quick sale etc) was likely to be much less and that my offer of £16,000 represented circa. two thirds of the equity.
The offer was rejected.
Am I right in thinking that the OR will accept an offer for the beneficial interest in a property which is not equal to 100% of the equity? If so, what kind of percentage is likely to be acceptable?
The reason I ask is that (approaching six months down the line) the picture has changed slightly with regard to the equity in my property. I can reasonably demonstrate that the value of my property has fallen by £6,000 - based on what similar properties close to me have sold for recently. Also, I stopped paying the mortgage when my offer was rejected and, consequently, the outstanding balance has increased to approx. £148,500. So, I believe that the equity in the property now stands at £21,500 and I wonder if it would be worth going back with an increased offer of £17,200 (not sure where the extra £1,200 would come from) which would represent 80% of the equity?
I have been completely open with my mortgage company about the situation and they have said that if agreement isn't reached with the OR soon then they will start the process of repossession.
Can they repossess a property where the beneficial interest is owned by the OR??
If they do go down this road then the amount left (after six months of non-payment of mortgage + legal fees) for the OR would be significantly less than the amount I'm proposing to offer and could, possibly, result in there being nothing left to distribute to my credirors. Surely the OR realises this and is it not their position to take the best offer available in order to maximise returns?
Or (as I fear is the case), will they not accept anything less than 100% of what they perceive the equity to be even if this results in there being significantly less money for distribution to creditors.
Sorry about the rambling nature of this post.
Regards
AP

samster5

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Re: Buying Beneficial Interest
« Reply #1 on: Feb 25, 2013, 09:29:10 PM »
It is better to be completely open with your bank or mortgage company about your situation that you are in.  And to have a open and honest approach.


Sam T


James Falla

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Re: Buying Beneficial Interest
« Reply #2 on: Jul 08, 2013, 12:34:58 PM »
Hi there AndyP
 
To answer your first question, the rules regarding beneficial interest in property were updated at the beginning of 2011. The affect of this is that the official receiver will now not accept anything less than 100% of the equity on paper in the property to buy back the beneficial interest. As such if your property is valued at £176k and the outstanding mortgage is £146 then you have to offer £20k notwithstanding that money would be lost in fees etc in a real sale.
 
If you believe that the value of your property has now changed my advice is get a local estate agent in to give you a quick sale on paper which you can present to the OR. To be belt and braces get 3 so you can show an average value and there can be no wriggle room when you speak to the OR. As I mentioned above you have to offer 100% of the on paper equity. Anything less will not be accepted not withstanding that after a repossession the OR (and creditors) are likely to get far less if anything at all. These are now the rules that the OR has to stick to.
 
In terms of the property being repossessed, the mortgage company can do this at any time if the mortgage is in arrears whether or not the beneficial interest is still owed by the official receiver.
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