How to Purchase a Repossessed Property

Selecting a solicitor: Choose your solicitors with care and ensure that they are aware from the beginning that you are under a strict timescale.

The agent or estate agent should ensure you are aware that 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) must be adhered to.

In many circumstances you may have as little as 21 days to exchange contracts, so you must ensure that you solicitor is aware of this.

Get your mortgage in place: Ensure that you have your mortgage agreed in principle. Click here to obtain a Decision in Principle.

As mentioned above your 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 and be prepared for some pessimistic advice from your solicitor.

The bank that has repossessed a property has no personal knowledge of that property. In these circumstances, the mortgage companyís solicitors are unlikely to provide your solicitors with comprehensive information relating to the property.

Your solicitor is most likely going to advise you that there is only scant information pertaining to any number of issues including neighborly disputes, parking arrangements, boundary maintenance, etc.

Leasehold properties: In leasehold situations there will probably be very little management information available, it is vital that your conveyancing solicitor 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 solicitor with any clarification as to whether or not alterations have been carried out to the property. It is vital that you really check that the lease plan matches the present property layout.

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

Please note that most leases do contain restrictions on carrying out any alterations to the property without the landlordís consent or changing the internal layout of the property without consent.

Vacant Possession: It is of course the responsibility of your Conveyancing solicitor to make sure that the contract is accurate and not leaning too much in the favour of the bank selling the repossessed property. Check that the contract provides vacant possession.

You are advised to take a little personal responsibility although you will be forgiven for thinking that your Conveyancing solicitor should ensure that this is the case but it is always 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 upon exchange of contracts: In the case of a purchase of a freehold property, the likelihood is that the contract provides for you to insure the property from exchange of contracts. Ensure that you check this point with your 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.

With 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.

Do not be forced into exchange of contracts: Do not let yourself be bullied into exchanging contracts before you, your lender and your solicitor 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 solicitor.

Remember that putting yourself in a position where you cannot complete the transaction is not to be underestimated. The penalties are draconian and considering that the seller in this case is likely to be a bank or building society they will have deep enough pockets to take this all the way to the Courts.

Be quick, as there will be no exclusivity: If another buyer places a higher offer on the property before you have exchanged contracts then the said bank will be obliged to accept that offer. You have been warned!

17-02-2011

This guide is for information only and should not be relied upon as definitive. Details have been obtained from various sources and although we have done everything possible to ensure that it is correct, we cannot accept responsibility for it or guarantee its accuracy. This is because processes and laws change frequently, and may vary dependant upon personal circumstances. You are welcome to use the information provided, but should always obtain confirmation of specific details and get independent specialist and legal advice.