Wednesday 22 November 2017

I wanted to buy an Allsop property - but was shocked to learn three mortgages were secured on it. Is this allowed?

The Allsop Space Property Auction at the RDS
The Allsop Space Property Auction at the RDS
Sinead Ryan

Sinead Ryan

Personal Finance expert Sinead Ryan answers your property questions.

Q. I was interested in purchasing a property at the Allsop auctions since some of prices appeared very good value and my money was earning nothing in the bank. To that end, I attended a recent auction and found a house that I wished to bid for at a very affordable price. My son insisted I first check to see if there were any problems associated with it and, to our shock, we learned there were no fewer than three mortgages secured on it. It seems this would have left us wide open to being chased for the debt by the owner or have the bank come after us. Is this allowed and why isn't the full information made available?

A. First of all, I would have to point out that buying property, even at an 'affordable price' is something that should only ever be undertaken after great diligence, research and preferably legal advice is sought.

That said, I contacted Allsop regarding your query. They are extremely experienced at auctions, with a high success rate of 90pc. There are links on their website, also made clear to prospective buyers at the auction, directing them to legal documents, contracts for sale and planning issues, along with a buyer's guide. They always recommend novice buyers use a solicitor to bid and advise. The job of the vendor's solicitor is to check the land registry and for liens and charges against a property, so it comes to them with this known. In a Receiver sale, which, according to the date on your email, this was, they pointed out that legally, the bank taking the repossession action (and thereby forcing the sale) takes precedence over any other debtors with an interest in the property and in the event of a sale, as the first charge-holder, any other liens or mortgages are effectively null and void. There is no possibility of you being chased for any residual debt as this stays with the previous owner and not the property.

This really isn't DIY territory and in the same way you wouldn't buy a car without knowing its provenance, you should tread carefully. If you are still interested in a purchase, it is a small extra expense, but a vital one, to equip yourself with legal advice first.

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