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Selling when in negative equity

selling in negative equityCan I sell when my house is in negative equity?

This is a frequent question we are asked, either during the course of negotiations with the Bank or prior to approaching the Bank as a consequence of financial distress.

The simple answer is yes, subject to the Bank consenting to the sale. This is the issue and we would suggest approaching a Personal Insolvency Practitioner (PIP) to approach the Bank on your behalf.

The options available, under the insolvency legislation, such as a PIA (Personal Insolvency Arrangement) or DSA (Debt Settlement Arrangement) can be used as a mechanism to resolve your debt issues after the property has been sold.

Obviously, this can only be embarked on when the property has been disposed of and your negative equity has crystallised (i.e. you have a definite figure of your total debt).

So what happens in a negative equity conveyance?

In reality, there is no difference between a negative equity sale and a regular sale save and except you will have to produce a consent from the Bank to the sale.

The processes are the same and our fees for the transaction are the same – €950.00 (plus VAT & outlays) (for more, see our detailed blog post here) but agreement is reached with the Bank as to the deductions that can be made to the proceeds of sale and confirmation is received stating that should the proceeds of sale be furnished to the Bank, then they will give the Purchaser of the property the necessary release to remove the Banks charge from the property.

Some items that sure usually allowed as deductions for the sale proceeds are as follows:

  1. Our professional fees (plus VAT & outlays),
  2. Your auctioneers fees,
  3. Local Property Tax (LPT) arrears,
  4. Household Charge arrears,
  5. Non-Principal Private Residence (NPPR) arrears,
  6. Management Company fee arrears (if you are selling an apartment)

Once they are paid, then a release will issue and you will then have to deal with the Bank in relation to the outstanding balance.

Unfortunately, this will not resolve your negative equity but it will a give you a definitive figure when you are dealing with the Bank through your PIP.

Also, it is worth remembering that should all of the above fail – if you can’t get a buyer, if you cant get the consent of the Bank, if you cant agree a reasonable basis for the repayment of the negative equity then you always have option of entering into Bankruptcy and walking away from all the debts.

If you are considering approaching a Personal Insolvency Practitioner and want to discuss the mechanism of selling your negative equity property, or if you have received a recommendation from the bank to sell your property, please contact Mark O’Kelly, the principal of the Firm on 086 7889753 or via email to mark@okellysolicitors.ie. All our contact details can be found here.

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