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Freedom,  in Woodbridge, VA

Stepdaughter has ratified contract on short sale. 1 day before closing, she is informed that seller filed backruptcy .Home MAY be part of proceeding

Asked by Freedom, Woodbridge, VA Tue Mar 8, 2011

Stepdaughter signs ratified contract to purchase condo in N. Virginia. The condo, a short sale listed for 160k. Home sold for 320K in 07. Home has weird brick wall blocking front door. Agent says it is keeping the house from selling. She advises her to bid 155K ,ask for closing cost assistance. I felt the house was priced low enough and bid 160K, put 5K as an earnest money deposit. We wait 3 months for bank and they(bank) say they need a net profit of 190K. We were going to bid 180K with 5K deposit. Day of closing agent says seller involved in bankruptcy in N. Carolina and not sure if seller has home involved in bankruptcy case. Seller's lawyer being notified to determine type of bankruptcy. Should she proceed and wait to see if home is clear of bancruptcy? Could seller have legally signed ratified contract to sell home if involved in bancruptcy?

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4
Paul Simpson’s answer
From what I understand it sounds like you did not have third party approval. The bank needed to net 190K and your stepdaughter was going to offer 180K. Even with 5K earnest money deposit the offer would still be 180K meaning your offer would fall short of the banks expectations by 10K and the closing date is one wrote into the offer as a day your stepdaughter wanted to close by. This does not mean your stepdaughter will not be able to purchase the condo so stay on top of it .
0 votes Thank Flag Link Sat Mar 3, 2012
It's business as usual if the home isn't listed as part of the assets under consideration for the defaulting homeowners bankruptcy filing. If this short sale has received approval from the bank as part of the ratification process there should be nothing stopping the homeowner from proceeding to the closing table. The title agency closing the transaction will verify if the house is still available for transfer of title.

Dwayne Moyers
Avery-Hess Realtors
0 votes Thank Flag Link Thu Mar 17, 2011
The seller has to sign the contract because he/she still owns the property. Their acceptance of the offer is subject to their lender's approval of the short sale, and in this case, might be subject to the bankruptcy court trustee's approval.
Your step daughter's agent needs to contact the listing agent and find out the status of the property and the transaction. The title agent that can tell you if the property is currently in bankruptcy.
If the property is part of the seller's bankruptcy, the deal is not "dead", it just more complicated.
0 votes Thank Flag Link Tue Mar 8, 2011
Your terms are confusing me a little. It sounds like you did not have a contract, only an offer. Did the bank ever sign anything or do you just have the owners signature? You must have a signature from the bank to have a contract and without that you have nothing and the bank can do what it wants. The seller has little power to move the bank to sign since the bank is loosing money. Often they just foreclose rather than deal with a short sale. I am not sure why, but they do. You say there was a closing so you must have a lawyer or title company involved, had they gotten the loan papers? Was it a real closing date or just the date you wrote in your offer to purchase?
0 votes Thank Flag Link Tue Mar 8, 2011
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