My Deal Is FALLING APART! Bankruptcy, Tax Deed, Oh MY! HELP!
I'll try to be as brief as possible and only include the important details.
I locked a property under contract. House will be lost to tax deed May 19, last day to pay redemption is May 14. I'm closing May 10.
There is no mortgage. I agreed to give the seller a certain amount plus pay all closing costs and make up the tax payments.
There are some issues with title coming up, including some open case the title company is investigating...may delay the closing. So I called the seller to find out more info. She said she couldn't think of any cases or judgements..................................except that she will be declaring BANKRUPTCY for credit card debt as soon as she moves out of the house.
She is going to file Chapter 7. It sounds like if I go through with the deal the sale will be reversed. So I think the conventional advice is to wait and have her file bankruptcy....then try to have the home discharged or excluded....it is a junker and has these back taxes.
BUT
The house will be sold for a tax deed SOON. More specifically it's the garage which is on it's own separate PIN...but losing would make this whole deal unattractive.
Any ideas on this one, or do I move on an chalk it up as a learning experience? Damn, I can't believe the seller didn't mention this when I asked her about any judgements, liens..anything that could cause problems besides the taxes.
Well a number of ideas.
You could go to the tax lien holder and offer to buy his lien for a nice profit now. Let the redemption period expire and apply for your tax deed.
You could insist that the proceeds of the sale be held in escrow for some period lest she file BK. Given the choice of grabbing a bunch of cash sitting in an escrow account or unwraping your deal to try to grab the equity the trustee is almost certain to go for the easy money. Of course the seller is unlikely to go for this on the grounds that hiding the money from the BK trustee is her whole reason for doing this deal.
A great deal depends on the status of the other title problems, Perhaps you could give us more data on those issues.
Forget it. This deal is dead. I've spoken with the seller...a lot of tears were shed as well as a hang up. I tried to offer advice on other avenues. I then sent an e-mail giving her options, and that I will try to think of any other way to help.
I got a reply accusing me of making up this whole thing to pull out. Also she'll be contacting her attorney to see if I have to uphold the signed contract. How she is an honest person and I'm screwing her over, etc etc....
So this deal is officially dead. I'm out a $10, title search fee...still not sure if my attorney is going to send me a bill. I didn't bring it up and he never mentioned it so...I'll keep quiet for now. I think I'll write a new post for everyone. I've learned a lot, and hopefully everyone else can benefit. Especially the newbies out there.