Buying When Owner Is Filing Bankruptcy
I made on offer on a house and moved ahead with an inspection to learn the day of the inspection that the owner is filing for bankruptcy. What are the risks for me as a buyer. Can I loose any money in this process ??
I made on offer on a house and moved ahead with an inspection to learn the day of the inspection that the owner is filing for bankruptcy. What are the risks for me as a buyer. Can I loose any money in this process ??
thanks guys !!
I appreciate. I pulled out and was probably wrong but it made me too nervous.
the other buyer ended up by having the building for peanuts so it ended up being a good deal for him. my lawyer told me thta it could end up in a bankruptcy court and that he was not a bankruptcy lawyer.
Be careful. We had a situation at work where we were doing a short term lease to own deal with a health care group. They went bankrupt about midway through the construction phase. It took years to extricate the courts from the matter and obtain clear title. It may have been complicated in that we were working with a not-for-profit who had pro bono legal representation, but it just seemed like it would have been a muck situration no matter who was representing.
You need a good lawyer with some experience in this. A run of the mill real estate lawyer may not have the expertise. It’s probably best to either completely close the deal before the bankruptcy case is commenced or to wait until after the seller files to even sign the contract. You probably don’t want to be “in contract” when they file.
Most importantly, you do NOT want to do this without a good lawyer.
Good luck
we went through the same thing. It delayed things a bit, but our lawyer was on top of it. i don’t know the ins-and-outs of it, but it’s very important to have a good lawyer experienced in this. I have several recs if you need.
This would make me nervous, for the reasons mopar suggested. I don’t know bankruptcy well enought to have an opinion as to how a contract for sale of real proeprty would be treated, but my hunch is that the potential exists for a morass. What if the creditors or court think the sale price is too low? And, in fact, that could be the case — sometimes someone facing bankruptcy tries to bring in some quick cash to prioritize a few debts before court/creditor control kicks in. Courts are wary of this. Here is where you need good, independent legal advice. Not a good place to use a RE lawyer recommended by broker. If your attorney tells you it won’t be a problem, kick the tires — “Have you dealt with this before? What happened? etc.” You want to know the basis of the legal opinion.
I think it makes them difficult to sue or enforce a contract. When you buy a place, the seller ordinarily has to swear in the contract that he or she is not in bankruptcy. Hopefully your real estate lawyer will be able to give you good advice about this.