Repossessed properties usually offer good value for money; they normally require a certain amount of refurbishment (which can reduce the asking price) and most lenders in repossession will want to achieve a quick sale. However, there are a few issues buyers need to be aware of when delving into the repossession market.
The main issue when buying a repossessed home is lack of information about the property. Remember, you will not be dealing with the owner/occupier; instead the sale will have been forced by an organisation where the homeowner has used the property as collateral and defaulted on a loan or mortgage secured on it. The seller (or lender in possession) will usually be a bank or building society. They will want to dispose of the property as quickly and as cheaply as possible, but they will also have a duty to the repossessed homeowner to achieve the best sale price and mitigate their losses.
These circumstances can create a few difficulties for the buyer:
As the seller will not have occupied the property they will have no personal knowledge of it, in some cases they may not even have the original deeds. Consequentially the seller's solicitor will be unable to answer many enquiries that are normally raised during a house purchase. You will therefore need to make your own enquiries to satisfy yourself (and your mortgage provider) that there are no legal problems with the property. It is highly likely that a strict and short deadline for completion will be imposed - sometimes as little as 14 days - so you will need to ensure your finances are in place. The seller will want to keep their legal costs to a minimum and limit their liability after completion of the sale. The seller may not have any paperwork relating to legal issues such as planning permissions, building control or NHBC certificates, therefore you will need to be prepared to do most of the legwork to obtain copies and cover any associated costs yourself. You can buy indemnity insurance to cover certain things (such as lack of planning permission), but these policies very often require answers to questions that only the homeowner would know. In that case you would need to obtain a bespoke policy which would be more expensive. You will need to rely on your own investigations for many other things, especially information about any issues with the neighbours, such as access or boundary disputes.
Firstly you should thoroughly inspect the condition of the property yourself and then get a structural survey. Repossessed properties are 'sold as seen' and the onus is on the buyer to ensure everything is in working order. The seller will usually state that it has no knowledge about the condition of fixtures, fittings or appliances, so it is very important for you to establish they are in good working order before you commit to an exchange of contracts; otherwise you'll need to factor the cost of replacements into your renovation budget.
If you are buying a repossessed house with a mortgage it is imperative that you do all you can to minimise delays by securing an 'in principal' offer from your mortgage lender before you make an offer on the property.
Once your offer on a repossessed property is accepted, the seller will impose a deadline requiring exchange of contracts to take place within a certain time frame - this คอนโด กรุงเทพ is typically 28 days if buying with a mortgage, or 14 days if buying with cash.
The seller's estate agent will advertise the offer they have received in the form of a public notice, advising if anyone wants to make a higher offer then they should do so before exchange of contracts. Contracts cannot usually be exchanged until at least 7 days after the notice is first published.
The possibility of being gazumped at the last minute is a very real risk when buying from a lender in possession. One of the pitfalls of buying a repossessed property in the UK is that someone else could make a higher offer at any time before the exchange of contracts. The seller is obliged to get the best price and must therefore consider any offers received right up to the day of exchange. If a new offer is accepted by the seller, your purchase could fall through, but you would still be liable for any legal and professional fees incurred at that stage.
If your purchase proceeds to an exchange of contracts, then the seller will require a deposit payment from you (usually 10%). Provided you complete within their time frame (usually 10 days) the property will become yours. If however, you cannot complete on time, it is highly likely that the seller will withdraw from the sale, the property will be re-marketed and you will lose your deposit.
You will become responsible for the property between exchange and completion, so you will need to purchase house buildings and contents insurance immediately after exchange of contracts. It is therefore always wise to insist that exchange and completion takes place simultaneously; otherwise you will be insuring a property that you cannot access immediately.
The seller is responsible for any arrears of service charges and ground rent which are outstanding at the time of completion. In the case of where the amounts are unknown, it is usual for the seller's solicitor to retain a portion of the sale proceeds to cover this liability. This is called a 'retention'. A lender in repossession however, will not hold a retention because it will want to finalise and close the mortgage account as soon as the sale has completed. The contract will usually be drawn so as to indemnify the lender in possession against any arrears that they were not aware of at the time of completion; so it is vital to get your solicitor to check the position before completion, and to pass any arrears details onto the seller's solicitors.
In a normal house sale the seller would repay all mortgages on the property and their solicitor would transfer the property using form TR1. A lender in possession however will use form TR2 (transfer under power of sale). This operates jointly as a transfer and as a discharge document. This means that any subsequent charges or bankruptcy restrictions registered after the lender's charge will be removed from the title by the Land Registry when the transfer is registered, otherwise this would have to be done using separate discharge documents.
You should always seek legal advice when buying a repossessed property as, if there is more than one charge on the property (and you fail to obtain a discharge document for an interest which is not covered by the TR2), you may be bound by it which can be extremely expensive. The lenders in possession do not generally provide the transfer on completion but usually send it on within 10 days of completion.
There are many things to consider when buying a repossessed property, compared to a normal house purchase. However, if you are able to get your finances in place quickly, are willing to keep chasing solicitors to keep things moving, can work within the seller's strict timescales and do lots of research yourself, then you may be able to bag yourself a property bargain.
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