How bankruptcy is recorded against property
This guidance covers property in England and Wales. Scotland and Northern Ireland have their own insolvency and land registration systems, and different rules apply there.
Bankruptcy can start in two ways. A creditor can present a bankruptcy petition to court, or a person can apply online to an adjudicator for their own bankruptcy. A creditor's petition is registered as a pending action with the Land Charges Department of HM Land Registry, and a bankruptcy order is registered in the register of writs and orders. Bankruptcies also appear on the Individual Insolvency Register, which is kept by the Insolvency Service.
Where the debtor is the sole registered proprietor, HM Land Registry will normally enter a bankruptcy notice on the title after a petition is registered, and a bankruptcy restriction after an order is made. Jointly owned property is treated differently. The trustee acquires the bankrupt owner's beneficial interest, and an appropriate restriction may be entered to protect it.
What a restriction does depends on its wording. Some transactions must be made by the trustee. Others, such as those covered by a Form J restriction, only need evidence that notice has been given to the trustee, which is not the same as consent. A restriction controls registration rather than banning a transaction outright. It is also separate from a bankruptcy restrictions order or undertaking, which limits the individual rather than the property.
What happens to the home
The Official Receiver normally becomes trustee when the bankruptcy order is made, and an insolvency practitioner may later be appointed instead. Property in the bankruptcy estate vests in the trustee, who realises it for creditors.
For a jointly owned home, the legal title stays with the registered owners and the trustee takes only the bankrupt person's beneficial interest. That share is not necessarily half just because there are two owners. Bankruptcy does not cancel a secured lender's rights, so any mortgage and costs come out of a sale before the owners' shares are worked out.
The other owner may buy the trustee's interest, but that does not change the registered owners or release anyone from the mortgage. If no agreement is reached, the trustee can apply for an order for sale. Once a year has passed since the estate first vested in a trustee, the court must assume that creditors' interests outweigh all other considerations unless the circumstances are exceptional. The ordinary hardship of losing a home, including the effect on children, may not qualify.
A special rule covers a home that, at the date of the bankruptcy, was the sole or principal residence of the bankrupt, their spouse or civil partner, or a former spouse or civil partner. Unless the trustee takes a step specified by law within three years, such as certain court applications, the interest normally revests in the bankrupt. Informal negotiation may not count, and the deadline can change, for example where the interest was not disclosed. Discharge does not itself return the interest or clear the title. Citizens Advice, StepChange and National Debtline offer free debt advice.
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Bankruptcy searches when buying or selling
The buyer's conveyancer checks the title register, and the lender's conveyancer usually carries out a K16 bankruptcy search against the borrowers on the lender's behalf. A clear title register is not a complete insolvency check.
Once an order has been made, the seller cannot sell the interest vested in the trustee as though it were still theirs. The conveyancer must establish who holds the legal title, who signs the contract and transfer, and how the trustee's interest will be dealt with. With joint ownership, the bankrupt person may still need to sign as a legal owner.
The risk starts when a petition is presented, not when an entry appears. If an order follows, a disposition of property made after presentation is void unless the court approves it, subject to some statutory protections. Nobody can be sure at that stage whether an order will be made. The options are to wait until the petition is dismissed or withdrawn, or to obtain a validation order.
If a search shows a possible match with someone of a similar name, the conveyancer must investigate until the lender's requirements are met. A borrower's denial may not be enough.
Buying from a trustee and clearing entries
Trustees usually know little about the property, so replies to enquiries are brief and buyers rely more on their own searches and surveys. A trustee may give only a limited title guarantee, or none.
Title entries, Land Charges entries and the Individual Insolvency Register are separate, and dismissal or annulment does not clear any of them automatically. The evidence needed depends on the entry and the event. On a trustee sale, the restriction should be complied with or cancelled as part of the registration arrangements, not left until after completion.
HM Land Registry Practice Guide 34: Personal insolvency explains the forms and evidence for title entries, and the Land Charges Department publishes separate guidance. Get advice from a solicitor or licensed conveyancer before exchanging contracts or agreeing a buyout.
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