Is This Legal?
There is a property I am interested in that is in the foreclosure process. The owner doesn't live there any longer and has no interest in keeping the house, so he's going to just let it go to the bank. The auction is coming up Sept 3.
The amount owed is $156k. The house needs about $15k in work (roof, windows, paint, flooring) and will be worth about $210k. According to a neighbor, the bank has offered to settle with the owner for $140k, but he declined.
Here's the question: Can I make a deal with him that he settles with the bank for $140k and I contract to buy the house from him for $145k in a simultaneous closing? He makes a quick $5k, and I get a good deal on the house. Since the bank is reducing the amount owed, are we going to get in trouble with this, is the bank going to see it and want the money that's going to the owner?
The reason I'm looking at doing it this way is because the owner is totally unmotivated to try to keep the house, and won't even return calls to interested buyers. But if he could make a quick buck for doing almost nothing, that might motivate him.
Any feedback? Is this legal? What is the best way to structure it?
Not sure first Time ive ever heard of the bank making a settlement with the owner like that, I have seen them take deficiency's at sale but not with the owner pre-sale! I dont have any advice for you but please post any more info you learn about this
You should check with the terms and conditions that the bank is willing to "settle" at. Worst case senario, you can use a non-profit company to make a tax deductable contribution to which will in tern gift money to whoever.