Property Administrators

[zuby84]

Hey guys,

There is a local property company that seems to be purchasing distressed property assets directly through a single administrator for very very cheap prices. They are purchasing properties from this said administrator and then flipping them on the very next month (via auction) for anywhere 2-3x what they originally paid for them without creating any additional value. I've long suspected this property company to be up to something a bit dodgy, but I've just spoke to someone who this has happened to and feel sorry for the guy. He had a property "worth" £70k repossessed by the bank, sold by the administrators for £28k to "property company" who subsequently sold it for £58k the very next month. I know of a few other examples too where this company has managed to buy property for a fraction of it's true value from the same bank/administrator; only to sell it a few weeks later for much much more on auction. They are not buying "job lots" of properties where they are then selling individually; rather one property at a time.

All seems a bit fishy, I always thought administrators had a legal obligation to get the best possible price for an asset. The cynic in me thinks there must be some type of "cosy"/illegal relationship between the said property company and administrators, but then I think that they wouldn't be so brazen always buying all these properties under the name of the same ltd property company.

Thoughts/experiences?

[Countdown]

I wouldn't be surprised.

Something similar - an acquaintance of my dad's is on very good terms with most of the local Estate Agents. If there are any bank repos he tends to be made aware of them long before anybody else. As a result , and because he's a cash buyer, he's usually managed to buy it for 50% of market value or less before others have even heard about them.

Bank doesn't care as long as it gets most of its loan back. EA gets commission and the only person who loses out is the poor sap who went bankrupt.

[Chrisgr31]

Aren't repossessions supposed to be advertised in a local price when sold, along with the details of the offer made? Certainly when I was going to buy a repo a few years back the Estate Agent advertised they had received an offer of £a and anyone who wanted to offer more had to so in a certain time limit.

[Simpo Two]

So a bank has a property they can sell overnight for £58K but sells it for £28K? No wonder they need bailing out.

[TVR MAN]

Have you looked at any of the administrator's progress reports to creditors to see if there is any kind of explanation? They are filed at Companies House.

[Alpinestars]

An Administrator has a duty to all creditors, not just the Lender. In the case of residential property, I'm not sure there would be any creditors other than the Lender. So any price anomalies can only really be challenged by the Lender, and as Countdown suggests, if they get back x% of their debt, they may be satisfied.

A notice of the Administration needs to be put into the London Gazette and a suitable local paper. This gives creditors (and you) fair warning of the Administration. You should contact the Administrator with an offer if that's what you want to do. He/she could be in quite a lot of difficulty if he/she sold a property for less than other offers (all other things being equal).

[MrJuice]

The person/people/company/administrator/EA handling the sale is taking bungs. Not rocket science

I know someone who paid an EA 6k so that he would sell a repo at £499950. In return, the EA told the bank that was the highest offer when in actual fact, the highest offer was 550k+.

It is disgusting and immoral but it is rife.

Another EA who sells land once told me that he sells land to the house builder who pays the biggest cash backhander. 10k in cash from a household name house builder is not uncommon. Lots of these 10k envelopes are passed around - council officials, planners, councillors etc are all on the take.

[Kudos]

Why is an administrator selling bank repos?

Surely it will be an estate agent acting on behalf of the bank and must be done openly and transparently

[Moominho]

I don't know about this particular example. But it's not unheard of for estate agents to tell preferred sellers about cheap properties before advertising them on the wider market in return for a "drink". Has always been the case to be honest.

[nikaiyo2]

Moominho said:

I don't know about this particular example. But it's not unheard of for estate agents to tell preferred sellers about cheap properties before advertising them on the wider market in return for a "drink". Has always been the case to be honest.

Yeah it happens all the time with NON repos. I get a call from my favorite agent as soon as they get the type of property I buy on their books and have completed deals without them ever advertising the property.
This is NEVER the case with repos, yeah I might get a look before they go on Rightmove, but the sale is NEVER completed under the counter.

the corporate sellers wont allow it, not once, maybe in the 90s, not now.
The mortgagee in possession has a legal duty to get a fair market value when they dispose of a property, they are liable for any shortfall, and can be sued to recover the difference.

In 2010 I purchased a repo, all good, slightly under the asking price, but a fair value for the time, condition etc, offer accepted, 7 day notice in the press all good, 1 day before we completed the seller realized that the 7 day notice had not been put on Rightmove, I was given 2 choices, accept a 7 day delay with no penalty, so the notice could go on Rightmove or the seller would withdraw from the sale and we would have to start over. They are paranoid they follow best practice, in my experience.

There is a lot more to the story than the OP posted... If it is as reported the mortgagor would have a clear case to sue the lender, as they obviously did not attempt to get a fair value...

[Johnniem]

Kudos said:

Why is an administrator selling bank repos?

Surely it will be an estate agent acting on behalf of the bank and must be done openly and transparently

Here is a perfect reason for regulating estate agents by requiring them all to be run by Chartered Surveyors, or under the auspices of some such similar institution. The fraud being committed, as described above, is contrary to the Bribery Act 2010, is it not? The poor sap whose house is being sold may well clear his debt if the house were sold for the correct amount and thus may not need to be made bankrupt. It's appalling!

[zuby84]

I'm sure that for 95% of the time, things are done properly and above board, but we've all had direct/indirect experience of underhand things going on where perhaps the rules aren't followed as they should be.

The cases I am aware of with this particular administrator and property company involved Ltd companies in administration that happen to have property assets so not the normal "personal repo's" - do company administrators also have to be seen to advertise the assets for x weeks publicly as in the case of "personal repo's"?

Anyway, I have called up this said administrator and asked them to inform me of any property assets that they are trying to dispose off - I'll see if I get any deals from them or not.

[Alpinestars]

zuby84 said:

do company administrators also have to be seen to advertise the assets for x weeks publicly as in the case of "personal repo's"?

.

Individuals don't go into administration. That's for companies.

And yes, the notification applies even to companies. Largely to flush out other creditors. If an IP sells all the assets of a company, and a creditor appears after the sale, if he hasn't given the requisite notice to creditors, he could be personally liable to pay other creditors. So it's a big no no not to advertise.

Here's a guide we did.

https://www.pwc.co.uk/assets/pdf/insolvency-in-bri...

[Paddymcc]

I personally have purchased quite a few properties that came via another family member becoming insolvent. These were well below market value. Other persons also buying some properties from the portfolio paid a 'finders fee' for getting these properties at such get value.

The estate agents, insolvency experts, valuers etc were all on the take whether this was a 'gift' or getting something at a cheap price.

I also purchased a warehouse and yard with building site formerly owned by a company which went bankrupt. The selling agent working on behalf of the lenders in England give me a preferential price in exchange for 5k. My intention was to flip it however I'll probably end up building my house there plus there is potential to develop 4 additional warehouses and rent those out too.

[TVR MAN]

Alpinestars said:

zuby84 said:

do company administrators also have to be seen to advertise the assets for x weeks publicly as in the case of "personal repo's"?

.

Individuals don't go into administration. That's for companies.

And yes, the notification applies even to companies. Largely to flush out other creditors. If an IP sells all the assets of a company, and a creditor appears after the sale, if he hasn't given the requisite notice to creditors, he could be personally liable to pay other creditors. So it's a big no no not to advertise.

Here's a guide we did.

https://www.pwc.co.uk/assets/pdf/insolvency-in-bri...

I think you are referring to the administrator advertising their notice of appointment rather than the OPs question which was about the administrator having to advertise the property for a set period before a sale.

The notice of appointment should be sent to all known creditors and advertised in the Gazette and possibly a newspaper. If a creditor wasn't on the creditors ledger at the time of appointment and the administrator's appointment was advertised in the Gazette, then a creditor has very little chance of making the administrator personally liable for their debt.

There is no requirement on an administrator to advertise a property for a set period before selling it. The administrator has to try and deliver the best outcome for creditors as a whole; if this is best achieved by not advertising a property then it is perfectly acceptable to sell the property without advertising. In practice it would often be difficult to justify that course of action but it could, for example, be the case that a good unsolicited offer is received which is only available for acceptance for a short period - do you accept this offer and avoid agents fees/marketing costs or do you risk losing the offer whilst you incur costs testing the market?

[Alpinestars]

Sorry if there's any confusion. I'm talking about advertising the appointment. Not the sale of specific assets, which would of course be impractical.

The appointment of an Administrator over a company that owns real estate is a cue to getting in touch with him with an offer or to find out what his sales process will be.

Hope that clears it up.

[zuby84]

If a company goes into administration, do the directors also lose the right to sue on behalf of the ltd company? I remember reading something about this a few years ago, but can't be 100% sure.

[Countdown]

zuby84 said:

If a company goes into administration, do the directors also lose the right to sue on behalf of the ltd company? I remember reading something about this a few years ago, but can't be 100% sure.

Bit confused.... which directors and suing who? Do you mean the directors of the Company in administration SUING the administrators? I stand to be corrected bu the only thing I can think of is the Shareholders suing the Administrators for misfeasance

[TVR MAN]

zuby84 said:

If a company goes into administration, do the directors also lose the right to sue on behalf of the ltd company? I remember reading something about this a few years ago, but can't be 100% sure.

The directors' powers cease on the appointment of the administrators and so they could not raise a claim on behalf of the Company without being given special sanction by the administrator (very unlikely). However, if the Company has a genuine claim against somebody then the administrator could pursue this in court, but as there would be a cost to pursuing the claim the administrators are only going to do this if there is a very strong chance of recovering funds.

[Ken Sington]

Paddymcc said:

I also purchased a warehouse and yard with building site formerly owned by a company which went bankrupt. The selling agent working on behalf of the lenders in England give me a preferential price in exchange for 5k.

Seriously???