Seller later filing bankruptcy??
Just met with an agent this weekend to look at several HUD foreclosures. She mentioned that she had gotten burned a while back by buying a property from a financially motivated seller and flipping it a few months later for a tidy profit. Low and behold, the seller later filed bankruptcy and the collecting attorney demanded that she (the agent/buyer) return the $20k she made to help cover the seller's bad debt. OMG...is this for real? It justs seems insane to me...assuming of course that the bk was filed AFTER the sell of the property. Any advice? I have been trying to investigate my state statutes (georgia) but haven't had any luck. I searched legal bankruptcy sites and landlord forums, to no avail. I realize that it may vary state to state but some direction would be appreciated!
Thanks!
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First, you won't have this problem with HUD properties. HUD will have taken care of all the title issues before the property is listed for sale.
This story illustrates just how important it is to purchase title insurance for each property you acquire -- even a quick flip property.
Thanks for your response. So, you're saying that title insurance would have kept this from happening to her? I forgot to mention that her situation didn't involve a HUD property, obviously. I recognize the value of title insurance and would never dream of signing a deal w/o it. Bottom line is...would that have made the difference in your opinion?
Thanks!
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