HELP! Getting The Deed But A Possible Bankruptcy
Hi, any help is greatly appreciated!
There's about 20% equity in the deal. He's willing to deed me the house subject to as long as I just take over his payments.
However, he says he may soon declare bankruptcy, even though I buy his house subject to.
Is this a HUGE red flag? What happens if he does deed me his house and files for bankruptcy?
Thanks!
Martin
Great question..... Anyone????
STOP....call your real estate attorney!! Laws are different in every state.
I'm not fond of attorneys but I'm not crazy enough not to use one!
I would try to get info out of him.
Who are the other debts, how much are they, will he not include the home in the BK?
try to figure out why...
Did I hear the magic number Zero? He will deed for no money. Come on now be a sport. Give him $10.00 as full consideration of any equity. Record the deed.
Is there a value? How much? How far behind is the nice man? Is the Property empty? Can you rent it at once. Do hope there is enough in the rental payment to pay the payments on the mortgage.
Now we play the waiting game. I hope you have a little time and patience. Advise me as it goes along.
Cheers, Lucius
Think you need to consult a bankruptcy attorney. I remember reading somewhere that anything"done" within 3 months of filing, can be ordered "undone" by the court. May not count with deeds, but.....Better check it out!
I believe the bankruptcy trustee can file to have the property taken back if the asset was sold by the debtor for less than market value. This law (of which I can't remember its name) is to prevent debtors from disposing their assets prior to declaring bankruptcy and leaving their creditors with nothing to claim. Although I think it usually applies to assets that were sold less for less than 75% of their market value.
Just thought of another sticky issue! If he deed to you "subject to" as far as the lender is concerned, he is still responsible. (THEY have not released him.) When he files, he is responsible for notifying ALL creditors. This means that they will now know and may enforce a due on sales clause. Touchy, touch. Be careful friend.
Thank you all for all of your great suggestions!
Looks like the topic generates quite a buzz!
I was also thinking perhaps there's a real DOS issue here:
If I have to declare to the bank that I'm the new owner, would seem to motivate the lender to call the loan due and have me requalify. They'd correctly assume that I'm liquid.
Thoughts?
is there no way you could protect yourself in the purchase and sales contract, or any other contract stipulating that the seller could not include the mortgage in any future bankruptcy? or does not protect you at all?
Quote:
On 2003-10-15 10:06, chaynes wrote:
is there no way you could protect yourself in the purchase and sales contract, or any other contract stipulating that the seller could not include the mortgage in any future bankruptcy? or does not protect you at all? <IMG SRC="images/forum/smilies/icon_rolleyes.gif">
If the seller violates that, what practical recourse have you got? He's bankrupt. Bankruptcy courts have total dominion over the debtors estate. With the exception of a few nondischargables and superprorities, everybody else is in for a graduated severity of screwing, depending on their positions/priorities.
Who gets special consideration from the courts in bankruptcy and why? Mainly...
1. Student lenders -- gov't policy is they can't take your degree back, so you can't brush your debt off.
2. IRS - gov't wants to get paid.
3. The bankruptcy attorney - without him, the mess doesn't get sorted out.