If you have purchased a property BMV (Below Market Value) or Sell and Rent Back then you really have to make sure that the person from whom you purchased the property from does not go bankrupt!!
The danger period is five years from date of purchase!
Here is an extract of an e-mail that I recently received:-
“……..12 properties have what’s called a Tomlin Order over them. This is because some tenants of mine whom I provided a sell and rent back solution to, went bankrupt and left me with having to agree to paying their debt + legal costs totalling £62,000. This was a Transaction Under Value so the law says I’m liable to pay their debt, and even though I tried to fight it legally I had no chance at all.”
When a person goes Bankrupt they have to disclose to the Official Receiver their previous addresses. The Insolvency Service will examine property sales to see if they were sold Below Market Value (BMV). Take a look at the 6.28 Statement of Affairs for an insight as to what questions a Bankrupt will be asked. Also don’t forget that a Bankrupt will have one or more interviews with the Official Receiver!
So if you are this type of landlord, then you really have to look after your tenants!! There are other solutions that will give you and your tenant greater protection.