Urgent Advice Required re House in UK

[captainslow]

Hi, would appreciate advice/comments on my situation. I have lived in the USA for over 3 years and have no plans to return to the UK (except for holidays). I own a house in the UK that has mostly been rented out but this year I have attempted to sell it - 5 months ago I accepted an offer and its been a long an protracted sale but I thought it was going to finally complete but have now been told that my buyer has been refused insurance due to the properties flooding history (last flooded in 2007!).

 

Now I am faced with the very real possibility that I stand no chance of selling the house - yes I could rent it again, but will surely be faced with the same issues in the future and I thoroughly dislike renting long distance. There is a little equity in the property but that is meaningless with no prospect of selling it.

 

What would happen if I just walked away from it, considering I do not live there and have no intention of returning permanently?

 

Thanks.

[honeybee13]

Hello there.

 

Has your buyer or maybe your estate agent exhausted all the possibilities for insurance?

 

Uncle Bulgaria visits this forum, maybe he'll have suggestions for you.

 

HB

[captainslow]

Thanks for responding - I am hoping that they are still trying but I want to see what my options are (being very pessimistic!).

[unclebulgaria67]

Hi, would appreciate advice/comments on my situation. I have lived in the USA for over 3 years and have no plans to return to the UK (except for holidays). I own a house in the UK that has mostly been rented out but this year I have attempted to sell it - 5 months ago I accepted an offer and its been a long an protracted sale but I thought it was going to finally complete but have now been told that my buyer has been refused insurance due to the properties flooding history (last flooded in 2007!).

 

Now I am faced with the very real possibility that I stand no chance of selling the house - yes I could rent it again, but will surely be faced with the same issues in the future and I thoroughly dislike renting long distance. There is a little equity in the property but that is meaningless with no prospect of selling it.

 

What would happen if I just walked away from it, considering I do not live there and have no intention of returning permanently?

 

Thanks.

 

If you hand the keys into the mortgage company, they will sell it below normal market value and if there is a shortfall they can chase you for the debt for a long time. Mortgage debts enforceable in court for 12 years under limitations laws. When repossessed houses are sold, it is often at a discount, plus they will add a lot of fees.

 

Why not find out about Home insurance which includes flooding and supply details to any buyer. Will your current insurers offer cover to a buyer including flooding, if the buyer meets standard underwriting criteria. Ask them. Brokers like Home Protect can source cover in most circumstances. Insurance will be available in most areas including flooding as the ABI has an agreement with government. It is just that the cost of insurance and the terms may not be very attractive.

[captainslow]

If you hand the keys into the mortgage company, they will sell it below normal market value and if there is a shortfall they can chase you for the debt for a long time. Mortgage debts enforceable in court for 12 years under limitations laws. When repossessed houses are sold, it is often at a discount, plus they will add a lot of fees.

 

Why not find out about Home insurance which includes flooding and supply details to any buyer. Will your current insurers offer cover to a buyer including flooding, if the buyer meets standard underwriting criteria. Ask them. Brokers like Home Protect can source cover in most circumstances. Insurance will be available in most areas including flooding as the ABI has an agreement with government. It is just that the cost of insurance and the terms may not be very attractive.

 

Cost is indeed part of the issue - I have been told by my agent that that my buyer has found some quotes that were very high, but hey, they at least quoted. If however, that means my buyer ultimately either chooses not to insure, or cannot get insurance, and the sale falls through (looking exceedingly like at the moment) I wanted to know what the ramifications might be if I DID walk away from it. I suppose the question is, how enforceable is any shortfall to the mortgage debt when I do not live in the UK? Believe me, this is not a path I want to go down - I would much rather sell the house and get at least some money back. If however, the risk is relatively small then its an option I might consider.

[unclebulgaria67]

Cost is indeed part of the issue - I have been told by my agent that that my buyer has found some quotes that were very high, but hey, they at least quoted. If however, that means my buyer ultimately either chooses not to insure, or cannot get insurance, and the sale falls through (looking exceedingly like at the moment) I wanted to know what the ramifications might be if I DID walk away from it. I suppose the question is, how enforceable is any shortfall to the mortgage debt when I do not live in the UK? Believe me, this is not a path I want to go down - I would much rather sell the house and get at least some money back. If however, the risk is relatively small then its an option I might consider.

 

Difficult to say how much of a loss, but i have seen a few examples of houses selling for about 30% below normal market value and the mortgage companies don't seem to sell them quickly. It might take them a few years to sell and they will add on all the various costs. So if you have no intention to return to live in the UK, it is a case of whether they will try to pursue you legally in the state where you live. You should check with the state where you live, whether the courts will look at foreign debts., if the credit agreement you signed allows courts outside of the UK/EU to enforce debts, it is possible that a US court might look at it.

 

Depending on the equity situation, there might be other options e.g reducing sale price, paying towards buyers Home insurance in first year. What about speaking with mortgage company to see whether there are other options e.g they buy the house.

[captainslow]

Update - house sold ok in the end so mortgage issue was ok.

 

However. I have now received an email from the local authority with the following excerpt:

 

"I refer to my e-mail below advising you of the outstanding balance owing on the Council Tax account in relation to xx xxxxxxxx, xxxxx and note we have not received payment despite receiving confirmation from your solicitor that this would be settled upon sale completion.

 

Please be advised that if payment is not forthcoming within the next 7 days, you will leave me no alternative but to instruct our external litigation solicitors Greenhalgh Kerr to commence with bankruptcy action which has significant credit consequences both in the UK and internationally."

 

Is this anything more than hot air, as I live in the USA and do not intend returning to the UK for anything other than holidays?

 

TIA

[unclebulgaria67]

Update - house sold ok in the end so mortgage issue was ok.

 

However. I have now received an email from the local authority with the following excerpt:

 

"I refer to my e-mail below advising you of the outstanding balance owing on the Council Tax account in relation to xx xxxxxxxx, xxxxx and note we have not received payment despite receiving confirmation from your solicitor that this would be settled upon sale completion.

 

Please be advised that if payment is not forthcoming within the next 7 days, you will leave me no alternative but to instruct our external litigation solicitors Greenhalgh Kerr to commence with bankruptcy action which has significant credit consequences both in the UK and internationally."

 

Is this anything more than hot air, as I live in the USA and do not intend returning to the UK for anything other than holidays?

 

TIA

 

They can't touch your US credit record, unless they get a US court judgement and that is not that likely.

 

Suggest that you write back saying that you are permanent residents of the US and they must ensure that any Solicitors they appoint are made aware of this, as any proceedings must be brought where a person is resident. Advise them that at this stage, that you are not in a position to consider their demands, due to current circumstances, but will keep the matter under review.

[captainslow]

Cheers Unc!

[captainslow]

Ok so the council replied:

 

"I am aware of your residency circumstances. As such advice was sought from our solicitors prior to the e-mail being sent to you. The impact of insolvency action being taken for a debt owed in the UK against a US citizen is that the legal costs incurred are substantially more. Subsequently, these costs are added to the debt you already owe and are payable by you."

 

Thoughts?

[unclebulgaria67]

They would have to pay all those costs up front to make you bankrupt, with no guarantee they would get their money back. They would not know whether you had other debts which would take priority, so they would not get anything.

 

Their Solicitors would have told them it was a waste of time and to simply put pressure on you. Many UK debts owed by US residents, get passed to a large US debt collection legal firm and they chase them up. It depends on what state you live in, as to how easy it would be for them to get courts involved. You would need to get local advice in that instance.

[captainslow]

It seems like the council rep is playing hardball and is intent on instructing Greenhalgh Kerr - I did ask about paying instalments and this was rejected as not being possible due to it being for a 'retrospective period' (which doesn't sound right to me). The amount is approx 1200gbp so I am hoping this will be low enough for them to not deem it worthwhile.

[unclebulgaria67]

It seems like the council rep is playing hardball and is intent on instructing Greenhalgh Kerr - I did ask about paying instalments and this was rejected as not being possible due to it being for a 'retrospective period' (which doesn't sound right to me). The amount is approx 1200gbp so I am hoping this will be low enough for them to not deem it worthwhile.

 

They are taking you as a plonker ( no disrespect meant). The new bankruptcy threshold is £5k, so that would not be an option. I doubt they would bother going to a US court for judgement,

 

They can't refuse payment by instalments, because if this ever got to any court and it was found they refused payment, they would be laughed at. Courts don't like getting involved, if repayment based on affordability by a debtor, has been offered.

 

They can instruct Greenhalgh if they like, as that does not mean anything. Quite often, these firms of Solicitors just chase debts, without any intention of taking any action.

 

It sounds like you are worrying about it and if this is the case, you can start making payments to the council on the basis you have already proposed. The council may have an online payment facility and you just have to put in your council tax reference number.

[reallymadwoman]

As bankruptcy isn't an option, they could possibly issue a money claim but would need the courts permission to serve out of jurisdiction so I can't see them bothering. Even if they did, as you have demonstrated a reasonable attempt at settlement (if you don't already have it in writing, email them offering to pay by instalments) then the courts could well consider their actions to be unreasonable which could leave them open to quite a large costs bill. No reasonable solicitor would be advising them to proceed with a claim against you.

Ignore the threats and pay what you can when you can.

 

You could in theory ignore the matter completely as the chances of them coming after you are relatively slim, but at least if they did and you've paid something you've got the moral high ground.

 

Incidentally, even if it was an option, making you bankrupt would serve no purpose at all as they'd be even less likely to get any money once all the fees and costs had been paid. I'll guess that whoever you're talking to at the council has just enough legal knowledge to make him/herself sound stupid.

[captainslow]

Thank you both for your comments - I have it in email form from the revenues officer at the council, refusing my request to pay by instalments. I had enquired also about paying via a foreign debit card and was told, today, that they only accept UK cards, which also seems pretty stupid to me. I feel like writing back asking him to clarify AGAIN that making instalment payments is not an option!

 

The bankruptcy limit is interesting - just so I fully understand, the debt would have to be OVER 5k before they could pursue this course of action?

 

Is it worth me repeating any of these facts back to the revenues officer, just so he knows I am not, in fact, a plonker? (no offence taken by the way!)

 

Thanks again!

[unclebulgaria67]

The revenues officer is purely there to pressure you into finding a way to pay all of the money now. They don't care what they are telling you. Many councils don't even employ these people and they are with a contractor like Capita group.

 

I would suggest that you don't bother contacting the council again. They can't make you bankrupt, as you need to be in debt with them by at least £5k. They are not allowed to refuse payment, as they are acting on behalf of all taxpayers. They cannot refuse payment from abroad. If you want to pay by instalments from abroad, simply go to the councils website payment screen and make the payments when you want to, making sure you key in the council tax reference number. Keep a record of payments made.

 

The plonker reference is that some of these council or Capita staff treat the public like idiots, when there is so much information online about these issues. They forget that what they are telling the public can be found to be rubbish within about 5 minutes.

[captainslow]

Ok, thanks - I just made a 10gbp payment online, which makes me mad considering he told me that I could not use a foreign card! Trying to stop myself calling him out on that lol

[unclebulgaria67]

Ok, thanks - I just made a 10gbp payment online, which makes me mad considering he told me that I could not use a foreign card! Trying to stop myself calling him out on that lol

 

I would not engage with them (possibly Capita) at all,as what they have told you is rubbish. They are probably a spotty 18yr old kid working for Capita.

 

Just pay what you can afford, when you can.

[captainslow]

From my delving deeper, I doubt they are Capita (fairly small district council) but I'll heed your advice and not engage with them any further - thanks for all your help!

[captainslow]

It seems I was wrong and they ARE Capita - the receipt for the payment I made was from a Capita email address! lol

[captainslow]

Ok, so I could not help myself - the revenues officer wrote to me today stating that as the full amount had not been paid the matter was being passed to Greenhalgh Kerr to commence insolvency proceedings. I replied stating that this course of action was disappointing, considering that I had now made 2 payments to the account. I also asked how insolvency proceedings could be brought, as the threshold was raised in October 2015 to £5000.

 

He responded that (and I am paraphrasing here), I cannot decide to start making token payments, expecting this to mean further action would not be taken. He then went on to say that as the bulk of the outstanding debt was accrued prior to October 2015, "legal action may still be taken". I consider this utter nonsense, so I replied stating that assertion was inaccurate, and asked if insolvency proceedings were commenced PRIOR to October 2015 (I know they were not).

 

I do feel like he is now making inaccurate statement after inaccurate statement, which I have a record of so while I could ignore him, I am rather intrigued as to what he will claim next.

[captainslow]

Damn, he bailed.... "I will leave that to you to challenge at the appropriate time". I am hoping that he realised he was on very dodgy ground.

[unclebulgaria67]

Damn, he bailed.... "I will leave that to you to challenge at the appropriate time". I am hoping that he realised he was on very dodgy ground.

 

If this person is making these false comments in writing, you could write to the Head of Revenues at the council with copies of emails, saying that you are willing to test this with the Local Government Ombudsman if they want to continue. That you have made payments based on what you are currently able to afford and if this silly behaviour continues you will stop doing so, leaving it up to the council to take whatever actions are available against a non UK resident where they are living. That you would bring to the attention of any Judge, the behaviour of the council, in dealing with payments to the account.

[unclebulgaria67]

The debt has to be £5k at the time of the insolvencycourt action being started.

[captainslow]

Ok, thanks... I have composed and sent a suitable email.