Title deeds and bankruptcy

[Claus]

Dear Nigel,
We are still struggling to fully understand the title deeds problem. In the case that there is no mortgage and no debt on the house, and all the searches are satisfactory, what is the situation of the buyer with no title deeds in case of the bankruptcy of the developer?
As the developer is still the legal owner, is "our" house one of his assets? If he goes bankrupt, will the house be part of the bankrupt estate? In case of bankruptcy, all his creditors, not only the bank, but also the SSF, and all suppliers etc. whom he owes money, will come to get their part of his estate. Will those creditors be able to levy execution on “our” property? Or is the house in fact ours, once we have deposited our contract with the land registry?

[Nigel Howarth]

In the case that there is no mortgage and no debt on the house, and all the searches are satisfactory, what is the situation of the buyer with no title deeds in case of the bankruptcy of the developer?

Let me put your mind at rest. If the developer has no prior mortgages or debts and all the searches are satisfactory, you don't have to worry. Depositing your contract of sale at the Land Registry gives you the 'right to own' property, although you do not own it legally until its Title has been registered in your name.

If a developer goes bust, an Administrator will be appointed to sort things out - and you will possibly get your Title Deeds quicker than if the developer hadn't gone bust!

However, if your property was unfinished at the time of the bankcruptcy, then you'd have to find a contractor to complete the work. Similarly, if the roads, pavements and other parts of the estate were also unfinished, you'd have to contribute towards the cost of completing them along with others on the development.

Regards,

[Claus]

Thank you!

[Vah]

But you would still recommend a Bank Gurantee?

[Nigel Howarth]

Hi Vah,

Think of a Bank Guarantee as being an insurance policy enabling you to recover your money should anything go wrong.

Personally I would say it is worthwhile getting a bank guarantee, although as I mentioned earlier, it can work out quite expensive. It will reduce your risk.

Regards,

[Vah]

Nigel,

The bank concerned has agreed to do a much reduced charge than the 1.8% for the Bank Guarantee. I hope for each year that the G'tee is vaild. Thx.

vah