Property Auction Solicitors and Bankruptcy Orders by Ford Banks Irwin Solicitors - The Property Lawyers in Manchester
Please note: Not to be used or relied upon without legal advice. These notes are for illustrative purposes ONLYProperty Auctions Solicitors and Bankruptcy Orders
A Bankruptcy Order has several implications for Property Law Solicitors and Lawyers. See also - Auction Property Solicitor and Bankruptcy Petitions - where the creditor's Solicitors present a bankruptcy petition to the Court but a bankruptcy order has not been made.
Land Charges Department Entries:
When a bankruptcy order is registered in the register of writs and orders, the entry looks something like this:
DIDSBURY * MANCHESTER *
W.O. (B) No 12345 Dated 1 August 2045
(5) ALTRINCHAM COUNTY COURT
(6) BUILDER AND DECORATOR
(7) 1 CHEADLE ROAD, MANCHESTER
When making the entry in the register, the Land Charges Department relies on the information that the Court Service supplies, which is taken from the petition and Official Receiver. The Land Charges Department then informs the Land Registry of all new bankruptcy orders. When it appears that the of a sole registered owner of a registered title is affected by a bankruptcy order, the Land Registry enters a bankruptcy restriction in the title register.
Land Registry entries:
Registering bankruptcy restrictions and inhibitions: After October 2003 the wording of a bankruptcy restriction that Land Registry makes in the Property Title Deeds looks like this:
BANKRUPTCY RESTRICTION entered under section 86(4) of the Land Registration Act 2002, as the title of the proprietor of the registered estate appears to be affected by a bankruptcy order against DIDSBURY MANCHESTER, made by the ALTRINCHAM COUNTY COURT reference 12345) (Land Charges reference number PA abcdef). No disposition of the registered estate is to be registered until the trustee in bankruptcy of the Property of the bankrupt is registered as proprietor of the registered estate.
Land Registry will make a similar entry to this if the title of a sole owner of a registered charge or mortgage appears to be affected by a bankruptcy order.
Prior to October 2003 the entry that Land Registry used to make was called a bankruptcy inhibition and looked like this:
BANKRUPTCY INHIBITION entered under section 61 (3) of the Land Registration Act 1925, as the title of the proprietor of the land appears to be affected by a bankruptcy order against DIDSBURY MANCHESTER, made by the ALTRINCHAM COUNTY COURT reference 12345) (Land Charges reference number PA abcdef). No disposition by the proprietor of the land or transmission is to be registered until the trustee in bankruptcy of the Property of the bankrupt is registered.
Land Registry also used to make a similar entry if the title of a sole owner of a registered charge or mortgage appeared to be affected by a bankruptcy order.
Confusion over names: It is inevitable that an entry will occasionally appear under a name in the register maintained by the Land Charges Department that is the same as that of a person who is not the bankrupt. Normally, the other details in the entry, such as the address and occupation, will make it apparent that that person is not the bankrupt. If the additional details are limited, however, confusion can arise.
If, when the Land Charges Department informs Land Registry of new bankruptcy orders, there are any doubts about whether the bankrupt is the owner referred to in a title register, the Land Registry will write to the owner before entering a bankruptcy restriction. This letter will be sent to the address given in the title register. Although this address is often the same as the address of the Property, this is not always the case. In addition, owners are notified when the bankruptcy restriction is entered in the title register. If, despite these steps it later transpires that the owner is not the bankrupt, Land Registry can cancel the entry.
The effect of a bankruptcy order and appointment of a trustee in bankruptcy:
When a person is made bankrupt either a trustee in bankruptcy or an Official Receiver will be appointed. Their main responsibility is to convert the bankrupt's assets, including any Property, into cash to repay as many of the creditors as possible. When this appointment takes effect, the bankrupt's Property transfers automatically to the trustee.
If the bankrupt is the sole registered owner of a registered title, the Official Receiver or Trustee in bankruptcy may apply to Land Registry to be registered as owner of the Property. However many do not, in which case, the Land Registry will enter a bankruptcy restriction (or inhibition, if prior to October 2003) in the register.
The presence of a bankruptcy restriction or inhibition on the Property Title Deeds will prevent the bankrupt from either selling, mortgaging or otherwise dealing with the Property without the involvement of the Official Receiver or Trustee in Bankruptcy.
Although the bankrupt is prevented from dealing with the Property, the Official Receiver or Trustee in bankruptcy can deal with it in their official capacities, which would include selling or mortgaging.
If the bankrupt is a joint registered owner of a registered Property, the Official Receiver or Trustee in Bankruptcy cannot be registered as owner of the Property and has to obtain a Order of the Court before the Property can be sold. Nor will Land Registry automatically enter a restriction in the register. However, the Official Receiver or Trustee in Bankruptcy can apply to Land Registry for a restriction to be entered in the Property Title Deeds. This reads:
"No disposition of the [choose option]
*registered estate, other than a disposition by the proprietor of any registered charge registered before the entry of this restriction;
*registered charge dated [ date ] referred to above, other than a disposition by the proprietor of any registered sub-charge of that charge registered before the entry of this restriction,
is to be registered without a certificate signed by the applicant for registration or the conveyancer that written notice of the disposition was given to [name of trustee in bankruptcy] (the trustee in bankruptcy of [DIDSBURY MANCHESTER] at [1 CHEADLE ROAD, MANCHESTER]
A similar entry would be made in relation to a registered charge jointly owned by the bankrupt and another.
This entry notifies any purchaser of the Property of the Trustee in Bankruptcy's interest in the Property, and provides for the trustee to be informed of any proposed sale.
Before October 2003 the Official Receiver or Trustee in Bankruptcy could apply for a caution against dealings in respect of registered Property Title Deeds jointly owned by a bankrupt. This prevents any dealing with the Property without notice being served on the Official Receiver or Trustee in Bankruptcy, giving them a chance to object.
continued on Property Auction Solicitors and Bankruptcy Orders page 2
(All italics in this page are Crown Copyright and reproduced here for your information with permission from HM Land Registry)
Placing the bankrupt's Property in an Auction:
Many Property Law Solicitors and Lawyers are asked to prepare an Auction Pack for Properties that are to be sold by Trustees of the Bankrupt at a Property Auction.
The Solicitor or Lawyer will liaise with the Trustees to choose the searches to be included in the Property Auction Pack.
The Solicitor or Lawyer will complete the sale of the Property following the Auction and place the sale proceeds with the Trustees. The Trustees can then distribute the funds in accordance with the Court Order.
For any further information please contact Ford Banks Irwin Solicitors.