Technical guidance for Official Receivers 29. Solely owned tenanted property
Dealing with an insolvent's solely-owned property where the property has or had tenants
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The official receiver may consider: a) Asking the tenant to send in a cheque for the rental amount every month/week (as per the terms of the tenancy agreement). b) Asking any current letting agent to continue to act and send in the balance on the account every month (see paragraphs 29.51). c) Asking the official receiver’s local agent to act in the collection of rent (see paragraph 29.54). d) Using a letting agent in their locality who is prepared to act for the official receiver (see paragraph 29.52).
Requirements
Some mortgage deeds may contain a clause entitling the mortgagee to security over the rent. This is only likely where a specific buy-to-let mortgage has been obtained. Official receivers should proceed on the basis that the mortgage does not contain such a clause. If the notice to the mortgagee prompts them to notify the official receiver of such a clause, a copy of the mortgage terms and conditions should be requested to verify this. Where there is a condition in the mortgage entitling them to the rent directly, the official receiver should ask the mortgage company to confirm that they will also be taking on the responsibility for the tenancy agreement. If the mortgage company refuses to do so, and the property is in negative equity, consideration should be given to disclaiming the reversionary interest in the property and tenancy agreement. See paragraph 29.33 for a definition of reversionary interest.
Fees
All income receivable on an investment property forms part of the legal and beneficial interest that will vest in the official receiver if they become trustee of the bankrupt’s estate. Investment income which forms part of the estate cannot be treated as the bankrupt’s income for IPA/IPO purposes as it will vest in the trustee and should therefore be collected by the official receiver upon appointment as trustee. All rent and other income from an investment property should be collected in full by the official receiver and should not affect any IPA/IPO calculation. See chapter 35 for guidance on IPA/O’s. For information on how to deal with rent received from a lodger occupying a room in the bankrupt’s property under licence see paragraph 29.18.
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Technical guidance for Official Receivers 29. Solely owned tenanted property
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