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 Joint owned – 1 bankrupt Joint owned – both bankrupt Sole owned EquityBuilding insurance Building and public liability No Equity No insurancePublic liabilityBuilding and public liability

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 tenancy. 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 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

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?