Real Estate Investing!

Seller in Chapter 7 - Attorney has told him - http://www.dealmakerscafe.com Forums

Original message

Steve

"Seller in Chapter 7 - Attorney has told him" , Wed 15 Nov 06:45

Seller is in Chapter 7. His attorney has told him he could sell his house. Can I buy it subject-to and the mortgage remain in his name? Will BK cause me any problems??
- Steve

Replies:

Lynn
Moderator

"Re(1):Seller in Chapter 7 - Attorney has told" , Wed 15 Nov 09:18

Hey Steve,

This is actually a copy of a post that I made in response to a similiar question that someone else asked. TJack's point is accurate when he says that these sellers are "usually" several months behind.

===========================
We have indeed purchased properties "subject-to" while in bankruptcy, but it is not an easy one to pull off. Basically you have to have the bankruptcy trustee's permission for the sale which means the seller will have to present the purchase contract to their bk attorney who in turn presents it to the trustee.

If there is very little equity, and the seller isn't getting any cash, then you will have fewer problems.

Even if it is chapter 7, or if it rolls into a chapter 7, you will not have to fear losing the property if the payments are current. The problem would come up if there was a ton of equity and the other creditors thought the property should be sold to satisfy their debts. However, if you have the trustees permission than you will not have a problem.

What would the penalty be for buying "subject-to" without the trustees permission?
Your risk would be that the bankruptcy court could reverse the sale. No other penalty. The chance of this happening on a home with No Equity is VERY SLIM. You just have to decide how much risk you are willing to take.

We have also had a case where the bankruptcy was simply for the purpose of saving the home and the people had virtually no other debts. In this case the seller withdrew their bankruptcy and we purchased the house.

If you are buying the property for cash then make sure that the seller isn't getting any money and that you definitely get the trustees written permission.

Happy Investing!
Lynn

TJack

"Re(1):Seller in Chapter 7 - Attorney has told" , Wed 15 Nov 08:28

I would say yes, but if foreclosure has been filed you will have to pay all the legal fees and back payments. If FC has not been filed you will just have to bring back payments current. Generally by the time a property gets into BK the home owner is WAY behind in payments therefore you can't get in light, which is the focus of this newsgroup.