What happens when you unknowingly purchase a sub sale property from someone who has been declared bankrupt?
According to the statistics of Insolvency Department, 82,383 individuals have been declared bankrupt by the courts in 2016, in which 69.3% were male.
With the bankruptcy incidents arising from defaulting on instalment payments on car, housing and personal loans, the increasing number is disheartening.
Speaking at the recently held Konvensyen Hartanah organised by StarProperty.my, advocate and solicitor Datuk Nazri Mustafa said finding the right lawyer is crucial when purchasing a property, especially when it involves purchasing a sub sale property.
A sub sale property is when you buy from the current owner of the property or the pre-existing owner, normally in the form of completed property.
“Purchases for subsale normally occur through printed and online advertisements or auctions, said Mustafa.
He said the transaction should not settle with a verbal agreement with real estate agents, but rather go through the purchase with the help of lawyers. The lawyers play a role in assisting the process of purchasing a property in black and white.
“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 Mustafa.
According to the Insolvency Department, once a person is declared bankrupt, the director general of Insolvency (DGI) comes into play, taking possession of all documents and assets of the bankrupt 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 would be distributed among the creditors, which basically means liquidating everything that one owns would now fall into the hands of the DGI.
“This means when a seller is bankrupt, he would need to get the approval from 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 Mustafa.
News Source: Star Property