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  • Property-a-holics

    Buying a repossessed property not on market

    I've found a vacant run-down flat that I'm interested in buying.  Talking to the neighbours, it transpires that the last occupant died about 3 years ago and the property since been vacant - it's in a very poor state.

    Land Registry lease title states under Title absolute:

         1. (xx.xx.1993) PROPRIETOR:  The Royal Bank of SCtoland PLC .....  (as trustee of Mrs XXX will trust).

    Does this mean it's been owned by RBS for a while - can I just contact them and offer to buy it?!

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    http://www.smartbuild.uk.com | Structural Engineer

    They wont sell it to you, they dont want to ever be accused of not achieving full value or the property not being comprehensively marketed. They will want to ensure they get best price which usually means auction.

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    Phil Stewardson.

    Stewardson Properties.

    Stewardson Developments Ltd.

    Burson Land Ltd. & Jennings & Gilchreaste Ltd.

    http://www.stewardson.co.uk

    Follow me on twitter - @philstewardson

    Thanks Phil - I had somewhere in the back of my head this might be the case, but why?  Who is it they have to answer to when selling such a property? Their shareholders? What about offers based on an independent RICS valuation?

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    http://www.smartbuild.uk.com | Structural Engineer

    SmartBUILD,

    We actually studied this as part of our Real Estate Masters on a law module.

    As has been alluded to it doesn't really have anything to do with the shareholders, if they could banks would sell it to retrieve their stake in the property and any costs.

    Its actually entrenched in law and the bank have to prove that they have gone about selling the property in the right way to achieve the best value for that property at that time. This is because any extra cash generated from the sale, once the bank has recouped their capital and (I believe expenses?) the rest is returned to the owner. E.g. I borrow £100k from the bank, my property is worth £150k. I fall into arrears, the property gets repossessed and the bank achieve best value sale at auction of £150k.

    The bank take their initial £100k leaving £50k left from the property, they have an additional £25k costs leaving £25k this is then returned to the original owner. 

    Hope this helps and I believe this is right but its been a good year since I did this module!

    Rob and Alex

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    Hi Rob/Alex,

    I agree the need for selling the property in the right way when it's been repossessed from a living owner or there is an interested party (i.e. those who will inherit if the owner died)

    In my situation, the Title suggests that the bank is the trustee of Mrs XXX's 'will trust'.  Which I take to mean Mrs XXX has died and the bank is acting as her trustee for the benefit of the will's beneficiaries.  This makes me wonder:

    1. who are the beneficiaries of the will?
    2. what is the banks obligation to them?
    3. if the beneficiary is the bank, then surely it's only themselves they're doing out of money (or is the beneficiary actually the State?)

    ...confused!

    My thoughts are (and I'm happy to be corrected as this is all just based on googling!):

    • if the bank is the beneficiary, then there's no reason they shouldn't sell at whatever price they want
    • if the beneficiary is a private person, the trustee has an obligation to act in the interest of the beneficiary and so they should be informed of an expression of interest in the property and it's up to them how they want to sell the property
    • if the state is the beneficiary, then I do see the reason it has to be sold on open market.

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    http://www.smartbuild.uk.com | Structural Engineer


    Ah okay,

    This slightly confuses matters and in all honesty I am not sure what applies here. 

    My initial thoughts are that best price would still have to be obtained.

    However, best thing to do now is contact the relevant person at the bank, say you want to put an offer in and see what happens and what they reply - worst they can say is no it will go on auction. (Double check the property has not already been marketed)

    Good luck!

    Rob and Alex.

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    Thanks Rob and Alex - I've sent a letter off to the bank so we'll see what happens!

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    http://www.smartbuild.uk.com | Structural Engineer

    If the bank is the Trustee of the Will, then it's bound by Corporate Trustee law.  Significantly in the case of your question, a Corporate Trustee is not permitted to benefit from the Will so the bank is very unlikely to be a beneficiary.

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    Thanks Beth, that's very useful information.

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    http://www.smartbuild.uk.com | Structural Engineer

    Even an independent valuation wouldn't do it, the property could go over that amount at auction.  Institutions have to be super careful with demonstrating good governance or they can land in all sorts of hot water.  It has be presented to the market, usually by auction.

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    well it may be a repossession or deceased estate. Lets say its your property and you had it repossessed, the bank sell it for £50k without marketing it fully. You believe it was worth £200k so start kicking up a fuss that they undersold it and they are crooked little tinkers, the press love stories like that so the bank gets grief. If they can show that its been fully marketed and they had a range of offers and sold to the highest bidder or it sold in the auction room then nobody can accuse them of being corrupt, unprofessional or stupid --- obviously this is a hyperthetical situation, nobody has anything but the highest regard for banks!

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    Phil Stewardson.

    Stewardson Properties.

    Stewardson Developments Ltd.

    Burson Land Ltd. & Jennings & Gilchreaste Ltd.

    http://www.stewardson.co.uk

    Follow me on twitter - @philstewardson