TENANTED PROPERTY

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

Background

Cases with equity – IPs Increase in cases with

no equity or negative equity

Increase in technical queries

Initial Questions

Is the property solely or jointly owned?

Is there a current tenancy agreement?

Additional questions to ask the bankrupt …

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

WHICH TENANTED PROPERTY SHOULD THE OR BE MOST CONCERNED WITH?

Types of tenancy

Main types: Assured Shorthold Tenancy Statutory Periodic Tenancy

Other types: Assured Tenancy Protected Tenancy Secure Tenancy

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

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

Enquiries to be made…

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

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

Insurance requirements

Joint owned – 1 bankrupt

Joint owned – both bankrupt

Sole owned

Equity Building insurance

Building and public liability

Building and public liability

No Equity

No insurance Public liability Building and public liability

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

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

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 tenancy.

Section 21 notice can only be issued after minimum 6 months term, may take several months to enforce. Court action needed to evict

Disclaimer Only in solely owned property, and if property

is 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 is onerous, even if rent already collected

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

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)

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?

Thank you!

Any Questions?