How To Buy A Repossessed House From The Bank

By MyVine | August 2, 2011

Choosing a solicitor or property lawyer!

Choose your conveyancing solicitor or property lawyer wisely and make them aware from the outset that you are purchasing a repossessed property and that you are likely to be under a very strict deadline.

The estate agent should make it very clear to you any deadlines that may be imposed by the banks selling the repossessed property (or motivated vendor needing to stop repossession by selling the property quickly for a discount).

Quite often it may take only 21 days to exchange contracts.

Get your mortgage in place!

Ensure that you have your mortgage agreed in principle.

As mentioned above your conveyancing solicitor is going to be under a tight deadline to exchange contracts. You certainly do not want to be held up because of your proposed lenders if you want to purchase the property and take advantage of the discount on offer.

Be prepared to take a view & be ready for some realistic advice from your conveyancer.

The bank that has repossessed a property has no personal knowledge of that property.

In the circumstances, the mortgage company’s conveyancers are unlikely to provide your conveyancers with comprehensive information relating to the property.

Your conveyancing solicitor is going to probably advise you that there is a distinct lack of information relating to any number of issues including maintenance of boundaries, disputes with neighbors, parking arrangements, etc.

Leasehold properties!

In situations where you are purchasing a leasehold property there may well be limited management information available although it is crucial that your conveyancing lawyer ensures that you have clear receipts for service charge and ground rent or alternatively that a retention is held back until such time as receipts are available.

Remember, liabilities will be inherited by you as the buyer of the property, these will include service charges,ground rent and you will also be responsible for any breaches of the lease.

Also, in cases regarding leasehold repossessed property it is unlikely that the average lender will be able to provide your conveyancing lawyer with any knowledge of changes that may or may not have been done to the property. It is therefore critical that you check that the lease plan accurately reflects the current layout of the property.

Your conveyancing solicitor has not seen the property and so you will need to guide him or her on this.

It is important to note that the majority of leases contain restrictions on property alterations both internally and externally being carried out without landlords consent.
 

Vacant Possession!

It is of course the responsibility of your conveyancing solicitor to ensure that the contract is accurate and not too weighted in favour of the lender in possession.

Please check that the contract provides that vacant possession will be handed over on completion.

Regarding the point above it is wise to take a little personal responsibility although you will be forgiven for thinking that your conveyancing lawyer should ensure that this is the case but it is worth you double checking the position (unless of course you are purchasing subject to an existing tenancy).

This is particularly vital as many properties that are boarded up are susceptible to squatters moving in.

Building Insurance on exchange of contracts!

In the matter of a purchase of a freehold property, the likelihood is that the contract provides for you to insure the property from exchange of contracts.

Please make sure that you double-check the position with your conveyancing solicitor.

If the onus is on you to insure then please check with the insurers that they are not going to have any problem with insuring the property especially bearing in mind that the property is probably vacant in between exchange and completion.

In the case of a leasehold property this is less of an issue because with most leasehold properties the onus to insure is placed on the part of the freeholder.

Don’t be forced into exchange of contracts!

Don’t let yourself be bullied into exchanging contracts before you, your lender and your conveyancers are ready.

The likelihood is that given the time constraints involved that the agents are going to apply considerable pressure to exchange contracts. Be guided by your conveyancing solicitor.

Don’t put yourself in a position where completion of the transaction cannot be achieved,as there are serious consequences. The penalties are draconian and bearing in mind that the seller in this instance is likely to be a bank or building society they will have deep enough pockets to take this right to the Courts.

Be quick, as there is no exclusivity!
 
If another purchaser place a higher offer on the property before you have exchanged contracts then the said bank will be duty bound to accept that offer.

You have been warned!

Topics: Buying Tips, Financing, Foreclosures, General, Investing, Selling Tips | Comments Off

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