Don’t Fall Prey to 'Sale-and-Rent-Back' (SRB) Schemes today!
11th May 2012
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Black Country solicitors are warning against schemes that have been operating in the local area where people sell their homes at a discounted rate and in return they stay living there as a rent paying tenant for a fixed term.
These sale-and-rent-back schemes can be an attractive option for homeowners experiencing financial difficulty and popular in the economic downturn.
However, specialist solicitor Jordan Whyte advises that whilst it may help pay the immediate bills and other debts – by getting involved in such schemes people will face new risks:
1)       You no longer own your home
2)       You may have to leave at the end of the fixed term tenancy
3)       Rent can be increased at the end of the fixed term tenancy
4)       You can be evicted for breaching a term of the tenancy agreement (i.e. not paying rent on time)
5)       You will be selling your property at an undervalue
6)       If the person or organisation buying your home falls into financial difficulty, the property could be repossessed and you could be forced to leave
7)       If you sell your property at an undervalue this may effect your eligibility for bankruptcy or other forms of insolvency
“Most cases we have recently consulted on involve sale-and-rent-back providers who have run into financial difficulties meaning homeowners are not receiving what they are entitled to” says Jordan Whyte.
“For example, if the agreement contractually provides for a final lump sum payment at the end of the fixed term tenancy; by the time the money is due to be paid to the homeowner/tenant, the property would have already been transferred to and remortgaged by the sale-and-rent-back provider”.
What if, say the sale-and-rent back provider is then declared insolvent? The mortgage stops being paid therefore the property will be repossessed by the mortgage provider.   The original homeowner/tenant is then effectively left renting a property they no longer own and awaiting eviction with no prospect of getting their money.
Jordan Whyte recommends that if homeowners/tenants with existing sale-and-rent-back agreements have concerns about their agreement, they should in the first instance contact their sale-and-rent-back provider or seek professional legal advice.
If you have been affected by a sale-and-rent-back scheme and require further advice - please contact Jordan Whyte of Addison O'Hare solicitors on (01922) 705 720
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