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Objectives. Know what questions to ask the bankrupt and other partiesUnderstand the difference between solely and jointly owned propertyHave an idea about the types of tenancies you are likely to encounterKnow when and how to collect rentKnow what duties the OR has as landlordUnderstand how to
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2. TENANTED PROPERTY
3. Objectives Know what questions to ask the bankrupt and other parties
Understand the difference between solely and jointly owned property
Have an idea about the types of tenancies you are likely to encounter
Know when and how to collect rent
Know what duties the OR has as landlord
Understand how to dispose of a tenancy agreement
4. Background Cases with equity – IPs
Increase in cases with no equity or negative equity
Increase in technical queries
5. Initial Questions Is the property solely or jointly owned?
Is there a current tenancy agreement?
Additional questions to ask the bankrupt …
6. Solely or Jointly owned? Solely owned
Legal estate vests
Tenancy is a contract which vests in trustee
OR is therefore landlord when trustee Jointly owned
OR not legal owner
Only beneficial interest vests in trustee
Tenancy remains responsibility of joint owners
7. WHICH TENANTED PROPERTY SHOULD THE OR BE MOST CONCERNED WITH?
8. Types of tenancy Main types:
Assured Shorthold Tenancy
Statutory Periodic Tenancy
Other types:
Assured Tenancy
Protected Tenancy
Secure Tenancy
9. Collection of rent If a current valid tenancy:
Collect rent from date of Bankruptcy Order
Solely owned property – from tenant or any agent appointed
Jointly owned property – from bankrupt(s) or any agent appointed
Don’t collect if tenant is a squatter or in default
10. Managing agents Solely owned – can allow them to continue acting for OR if they will
Check agreement and terms are acceptable
Jointly owned – agreement remains vested with joint owners
OR can ask agent to forward bankrupt’s share
11. Enquiries to be made…
12. OR as landlord… Solely owned property – OR is the landlord from date appointed trustee.
Tenant peaceful enjoyment
Tenancy Deposit Scheme
Insurance
Repair and maintenance
Gas Safety
Electrical Safety
Fire Safety (if furnished)
Inspect property and return deposit
13. Damage Deposit Since 6 April 2007 must be held in government approved scheme
Monies held on trust for tenant (OR cannot claim for estate)
Solely owned – OR responsible for holding deposit appropriately
Jointly owned – bankrupt and joint owner still responsible
14. Insurance requirements
15. Repairs & Maintenance If solely owned property
Refer to tenancy agreement for what is covered
Generally you should keep in repair the exterior structure
Keep in repair and proper working order installation for supply of water, gas and electricity and for sanitation, and for space heating and heating water
16. Gas & Electrical Safety Gas Safety (installation and Use) Regulations 1998
Annual safety check
Electrical Equipment (Safety) Regulations 1994
Every 1 to 5 years
Obtain copy certificates or get checks done
17. Disposing of tenancy Only way to end OR’s liability in a solely owned property is to end tenancy either by:
Issuing a section 21 notice requiring tenant to leave after 2 months (should not be used);
Disclaiming the reversionary interest and tenancy agreement.
Section 21 notice can only be issued after minimum 6 months term, may take several months to enforce. Court action needed to evict
18. Disclaimer Only in solely owned property, and if property and tenancy agreement taken together are onerous:
If major repairs are currently needed
If property is dangerous
If tenant has defaulted, or is a squatter
Should not be disclaimed “just in case”
Can disclaim later if something comes to light that means when the tenancy and property taken together become onerous, even if rent already collected
Must disclaim both the reversionary interest in the property and tenancy agreement to be effective
19. Effect of Disclaimer Disclaimer destroys the tenant/landlord relationship
Does not destroy tenant’s right to occupy
Rent does not revert to bankrupt
Brings bankrupt’s interest in tenancy to an end
May affects mortgagee’s ability to appoint a receiver
Only consider in exceptional circumstances
20. Family Home Provisions Section 283A does not apply to investment property
May apply in certain circumstances – e.g. if the tenant is the bankrupt’s spouse or former spouse
Will not re-vest after 3 years (Don’t send MP1)
Should not offer bankrupt chance to purchase interest back (but can be done in exceptional circumstances)
21. Conclusion… Do you now know:
What initial questions to ask the bankrupt?
The difference between solely and jointly owned property?
About the types of tenancies you are likely to encounter?
When and how to collect rent?
What duties the OR has as landlord?
How to dispose of a tenancy agreement?
22. Thank you!Any Questions?