Former BTL sold in auction by receiver, with former owner still living in property.

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    Former BTL sold in auction by receiver, with former owner still living in property.

    Hello all - I'm neither the buyer nor the former owner, but this situation is currently happening to someone I know. I'm looking for some guidance on how to best inform that person and ideally, clear up this problem.

    The situation is the the former owner had the property as a BTL as an asset under a private ltd company. The property was left vacant for 18months, with no tenants the owner fell behind with the mortgage repayments (and council tax also, this person has no other income) until the bank instructed a receiver company to place a charge on the company, and auction the house. It has since been sold as of 1 month ago.

    In this period, the former owner has moved in semi-permanently - is this deemed as illegally squatting? It's difficult to find information for this specific scenario. The former owner does still have the keys to the property so they didn't break in, but because this was a BTL property, I don't believe they were allowed to live in it themselves, and also that possibly means they do not have a tenancy agreement.

    Does anyone have any experience of this situation? What is the former owner's legal rights in this case, and for the new buyer, do they need a court order to remove this person? As I understand, a court order is required for AST agreements, but in this case it's at best unclear whether this applies.

    #2
    It is squatting and unlawful entry. When did he move in before or after exchange - if before that is a claim against bank. If after - really bad luck for the new owner.

    Comment


      #3
      Originally posted by Anna1985 View Post
      It is squatting and unlawful entry. When did he move in before or after exchange - if before that is a claim against bank. If after - really bad luck for the new owner.
      Thank you for replying!
      They were inbetween places before the auction, sometimes staying at the property for a few nights then leaving again. I guess you could say that they `technically` moved in before the sale because they have their furniture and items in the property for a good year or so.

      Also, the auction listing actually stated this:

      occupied by the beneficial owner of the borrowers company

      So the buyer is fully aware of this - what will the new owner have to go through in order to reclaim possession? And if this is still squatting, how can the police be involved to lawfully remove this person?

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        #4
        Presumably it was bought at a discount. So a cash offer to vacate may get the problem solved.

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          #5
          Originally posted by Codger View Post
          Presumably it was bought at a discount. So a cash offer to vacate may get the problem solved.
          Yes, it does appear at a discount. Person will not accept a cash offer to vacate.
          What can the new owner do in this case?

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            #6
            It is not squatting. Occupants had permission to be there (from themselves when they owned it).

            Why would you care ? There's better causes to help than a daft and frankly stupid purchaser of such a property IMHO
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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              #7
              Originally posted by theartfullodger View Post
              It is not squatting. Occupants had permission to be there (from themselves when they owned it).

              Why would you care ? There's better causes to help than a daft and frankly stupid purchaser of such a property IMHO
              Thank you for your input.

              I'm not siding with the buyer on this, I'm simply trying to get an understanding of where the former owner stands, and what they can expect further down the line.

              Comment


                #8
                When the sale completes, the occupant will be a trespasser, because the permission they have given themselves to live there will expire - they are no longer able to give that permission.
                They can't be a squatter (as noted above) because they weren't trespassing when they took possession initially.

                Unless the occupant is paying rent to the company they own, they are not a tenant, and so the purchaser doesn't inherit the tenancy.

                In theory, the new owner can use reasonable force to eject the occupant, which is the same right any property owner has.
                However, this might become complicated in real life, and "reasonable force" probably means no force at all in this case - it's not as if the situation is a surprise or the owner has stumbled on someone breaking into their home.
                And no one wants the police to become involved.

                The new owner can make an application to a county court for a warrant of possession which can be executed by county court bailiffs or escalated to High Count Enforcement Officers as soon as they are the legal owner.

                It's also possible that the occupier will simply accept that they have to move out once the property is sold.
                Until it is sold, they won't be able to access local authority support as they are technically not homeless, so there's a chance they're waiting for this to change.
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                Comment


                  #9
                  If he has been paying rent, even to his own company, then it's most likely an AST.
                  In which case the new owner takes over as landlord and will need to evict by due process.
                  Valid notice, court order, bailiffs (if necessary).

                  However if he hasn't been paying rent, or paying lesss than £250 a year (less than £1K in London) then it cannot be an AST.
                  In which case he is most likely an excluded ocupier (rent free acommodation), there with the permission of the previous owner.
                  So he can be 'peacably' removed after 'reasonable' notice, without the need for a court order.

                  See Shelter for "Excluded Occupiers (Rent Free)" and "Eviction of excluded occupiers".

                  Comment


                    #10
                    Having thought about it more, a lot depends on what the occupant does.

                    If he produces a tenancy agreement with an amount of rent showing with him as the tenant and his company as the landlord, the purchaser will find it hard to do anything other than take over the tenancy and go through the possession process.
                    If the alternative is being homeless or entering a local authority hostel I think I'd be tempted to "find" such a document.

                    It might be quite difficult to prove that the tenancy wasn't real and that the arrangement is a sham, even if no rent had ever changed hands.

                    And, then, the eviction might be tricky because it would be very difficult for the new landlord to show that the things had been done that are necessary to allow a section 21 possession claim to be made, so there would be a delay until enough rent was owed for a claim on that basis.
                    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                    Comment


                      #11
                      Originally posted by b_loo121 View Post

                      Thank you for your input.

                      I'm not siding with the buyer on this, I'm simply trying to get an understanding of where the former owner stands, and what they can expect further down the line.
                      & will you let them know having got that understanding, please?

                      Strongly suggest to him that he 'phones the free Shelter helpline, 0808 800 4444. But this case is a tricky one. He should expect a wait before being answered from this overworked charity.
                      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                      Comment


                        #12
                        Surely they were not living there as the owner. The bank was the owner. The bank effectively bought it from him (in a forced sale correcting whatever balance) and then sold it with a sitting occupant.

                        They should be kicked out (as should any other tenants/occupants who are stealing accommodation), but I'm not clear why they deserve any less rights than any other person needing a home and not paying rent (stealing).

                        Comment


                          #13
                          Originally posted by jpkeates View Post
                          If he produces a tenancy agreement with an amount of rent showing with him as the tenant and his company as the landlord, ....

                          It might be quite difficult to prove that the tenancy wasn't real and that the arrangement is a sham, even if no rent had ever changed hands.

                          And, then, the eviction might be tricky because it would be very difficult for the new landlord to show that the things had been done that are necessary to allow a section 21 possession claim to be made, so there would be a delay until enough rent was owed for a claim on that basis.
                          If it was a BTL, I don't imagine letting to the owner/director of the company was within the permission of the mortgage. Not sure if that would make things easier.

                          Originally posted by b_loo121 View Post
                          occupied by the beneficial owner of the borrowers company
                          They buyer bought it at a discount. They can use that savings to pay for a lawyer to sort it out. Seriously, if someone bought a property at auction knowing hte occupation was happening, they should be prepared to sort it out.
                          I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                          I do not answer questions through private messages which should be posted publicly on the forum.

                          Comment


                            #14
                            Originally posted by KTC View Post
                            If it was a BTL, I don't imagine letting to the owner/director of the company was within the permission of the mortgage. Not sure if that would make things easier.
                            I doubt the lender cares any more.
                            The issue is closed as far as they're concerned (unless there's still money owed.

                            And I agree with your point about the discount.
                            The auction made potential buyers aware of the situation, and the time to be working out the consequences isn't after you've bought something.

                            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                            Comment


                              #15
                              Originally posted by AndrewDod View Post
                              Surely they were not living there as the owner. The bank was the owner. The bank effectively bought it from him (in a forced sale correcting whatever balance) and then sold it with a sitting occupant.

                              They should be kicked out (as should any other tenants/occupants who are stealing accommodation), but I'm not clear why they deserve any less rights than any other person needing a home and not paying rent (stealing).
                              I'm not sure if being sold by the receiver is the same as the property being repossessed and then sold.

                              Comment

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