What happens when you buy from a bankrupt?

WHAT happens when you unknowingly purchase a sub-sale property from someone who has been declared a bankrupt?

​
According to the Insolvency Department, 82,383 individuals (69.3% of them men) were declared bankrupt by the courts in 2016.

And the number of bankruptcy incidents arising from defaulting on instalment payments for car, housing and personal loans is increasing.


Speaking at the recently-held Konvensyen Hartanah organised by StarProperty.my, advocate and solicitor Datuk Nazri Mustafa said finding the right lawyer was crucial when buying property, especially when it involves sub-sale property.

A sub-sale purchase is when you buy from the current owner of the property or the pre-existing owner, normally in the form of a completed property.

“Sub-sale purchases usually occur through printed and online advertisements or auctions,” said Nazri.
He said the transaction should not be settled by verbal agreement with real estate agents.

“Go through lawyers. They will assist in the process of purchasing a property with proper checks and documentation.

“There have been plenty of cases in which sub-sale property sellers were found to be bankrupt. In such cases, you would need a lawyer to verify if the seller is a bankrupt,” added Nazri.

According to the Insolvency Department, once a person is declared bankrupt, the Director-General of Insolvency (DGI) will take possession of all documents and assets of the individual, including bank accounts and properties. Subsequently, the person-in-charge will administer and investigate all affairs related to the bankruptcy.

The DGI then has the right to sell all assets, from which the proceeds will be distributed among the creditors. This basically means liquidating everything that the individual owns.

“When a seller is bankrupt, he would need to get the approval of the DGI before selling his property.

“All of this involves a large workload of legal proceedings and you would want to have a good lawyer by your side when buying such properties,” said Nazri.

Refer from StarProperty.my

---