Insolvency practitioners and solicitors acting for bankrupts are well served by precedents and authorities on what steps can be taken by trustees in bankruptcy to realise jointly owned property where some equity remains.

The Insolvency Act provisions relating to the matrimonial home reflect the fact that the Act was the product of times when a buoyant property market often produced an increase in capital for home owners, rather than an increase in debt.These days, by the time a bankruptcy order is made, it is unlikely that the bankrupt's property will be an asset worth realising for creditors.

Minimal or negative equity is the norm.

So what happens then?On the appointment of the trustee in bankruptcy - be that the official receiver or an independent insolvency practitioner - the bankrupt's property vests in the trustee and, unless and until that property is realised, transferred or assigned, it will remain the trustee's property.If the property is owned jointly by the bankrupt with one or more others then only the beneficial interest in the property will vest in the trustee, the legal title remaining unaffected since property that is held by the bankrupt as trustee does not form part of the bankrupt's estate.If there is little or no equity in the property, the bankrupt and his or her co-owner may feel unconcerned that the bankrupt's equitable interest is now vested in the trustee in bankruptcy.

They may feel differently, however, if they remain in the property, the housing market improves and that interest is once again a positive asset.

Even if the bankruptcy is long since discharged, the former bankrupt's interest in the property will still be vested in the trustee, who could take steps at that time to convert that interest to cash.It is therefore expedient for the co-owner to find a way of retrieving the beneficial interest from the trustee while property prices remain static.

Joint owners are likely to find insolvency practitioners and official receivers amenable to a request to purchase the interest of the bankrupt in the property now held by them for a sum which will reflect the current value of that interest.The form of transaction preferred by the Insolvency Service, and adopted in the majority of cases by official receivers, is a transfer of the legal and equitable interest in the property to the joint owner.

This extracts the official receiver from the property and allows the case to be closed at the date of discharge.

If the interest is not dealt with, the trustee will be unable to close the bankruptcy file, leading to an untidy back-up of cases, some many years old.What happens to charges on the property? A bankruptcy order will not generally concern the mortgagee of a bankrupt's property.

As secured creditor the bankruptcy will only affect its ability to recover any unsecured balance in the event of repossession.The liabilities of the bankrupt and any co-owner for the mortgage debt continue and if they are to avoid repossession proceedings they must keep up with the mortgage payments.

If they succeed in maintaining these, the mortgagee is unlikely to take any action as a result of the bankruptcy notice, even if the mortgage conditions allow it to do so.If a transfer to the co-owner is proposed, but with no requirement that the bankrupt be released from liabilities under the mortgage, this transfer need not concern the mortgagee and the transfer can take place simply subject to the outstanding liabilities.

It may not even be necessary to obtain the prior consent of the mortgagee, depending upon whether the mortgagee has registered a restriction at the Land Registry.

Bank lenders will probably have registered a restriction, but building societies rarely do so.Failure to obtain the consent of the mortgagee to the transfer may mean that the bankrupt and the co-owner are in breach of their mortgage conditions, but it is likely that the terms of the mortgage will also provide that the mortgagee's power of sale becomes exercisable on the making of a bankruptcy order against the mortgagor.

If the mortgagee has not taken adverse action in response to that event, it is unlikely to be concerned by the transfer, particularly since its position will be unaffected.If the bankrupt is no longer in occupation of the property, he or she may be concerned to obtain a release from continuing liabilities under the mortgage.

This option will not necessarily be attractive to the mortgagee, who may want to rely upon the bankrupt's continuing contractual responsibility for the mortgage covenants.

It is not unheard of, however, particularly if the joint owner is being assisted by a member of the family or a friend in procuring the transfer.

In this case the mortgagee may respond positively to a request for the release of the bankrupt.An alternative might be for the bankrupt to obtain an indemnity from the joint owner for continuing liabilities under the mortgage, although clearly this will not provide the same reassurance to the bankrupt as a release from the mortgage itself.The bankrupt and co-owner may attempt to transfer the property to a third party without the knowledge of the trustee in bankruptcy.

If this occurs purchasers of unregistered property will be alerted to the trustee's interest by the bankruptcy notice appearing on a land charges search.In registered land, if the property is solely owned by a bankrupt, a restriction is automatically entered against the registered title, on receipt of the bankruptcy order from the official receiver by the Land Charges Registry.There is no automatic registration of a restriction for property in joint ownership on the making of a bankruptcy order and it is therefore likely, in order to protect their interest, that trustees will have registered a caution.The bankrupt cannot prevent an assignment of the equitable interest since it no longer belongs to him or her.

If the legal title is being transferred as well as the equitable interest, the bankrupt must sign the transfer deed.

However, if the bankrupt is untraceable or refuses, the trustee can make an application under s.41 of the Trustee Act to be appointed trustee in the bankrupt's place.

The transfer can then be executed by the trustee and the transferee only.