http://www.trulia.com/voices/Home_Buying/I_have_a_buyer_wanting_to_buy_under_a_wrap_yet_the-129170term is up. What would happen if the seller did file bankruptcy and buyer is in property under an agreement for sale/wrap? How would bankruptcy court rule on something like this? Ready to write yet my buyer is gun shy for this reason.en-ushttp://www.trulia.com/voices/profile/Real_Estate_Pro-Scottsdale_AZ-769058/http://www.trulia.com/voices/profile/Real_Estate_Pro-Scottsdale_AZ-769058/Thank you for your answer and your concerns. Let me give you my background more thoroughly. I have been a Realtor for over 29 yrs., 27 of those I have been a Broker. I have been a Senior Escrow Officer for 11 years, and closed Wrap Mortgages before and I do know the ramifications of all your states concerns. Please know I do appreciate everyones input. I am not legal councel nor are any of you able to give legal advice but, my question of concern is what would happen if the seller would file bankruptcy before the 3 year term of this particular wrap were over. My buyer has legitimate concerns and the seller is an investor who bought a model home and he has know been given back the property to sell on this own. The seller bought and leased back to builder and now he needs to sell. Since, this guy is an investor and my buyer needs to have a creative way to buy right now, I thought this would make for a win-win situation. My clients love the home and the seller needs to sell. Again, thank all of your knowledge, time to post an answer and most of all your professional concerns. Regards, TheresaWed, 27 May 2009 08:49:19 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Phoenix_AZ-535182/http://www.trulia.com/voices/profile/Real_Estate_Pro-Phoenix_AZ-535182/Theresa, I am not an attorney and since you are a licensed realtor I have no problem discussing this with you. First, your clients really should consult an attorney to discuss this possible situation and to CYA you should be suggesting that. In fact I would have them sign a letter stating that you advised them to consult an attorney before proceeding and so on. The wrap would be serviced by a title escrow company right? So the payments will be made on time because the escrow company will be making sure the money your buyer is paying is making the payment for the seller in effect. The payment amount should be comparable to the loan amount they would be financing. If you are providing a down payment, see if the sellers will accept the money down be placed in a 3rd party escrow and hold it there until you are able to finance the home and pay off the seller. Then the down payment goes to the seller or sellers bank at closing. The max exposure for the buyer should only be the monthly payment which no matter where they go they will always have that payment be it rent or a loan payment. I am almost certain that you can name things or creditors that are included in a bankruptcy and the home if in good standing would be hard to place there. Be careful of the "accelerated clause" that the owner could have on a mortgage(s) that says the home must be owner occupied. If the courts get involved and the banks are alerted they may apply the clause as "due and payable" forcing your buyers out of the home and pressing the sellers for the full monies or. Also, there is a "homestead" law you should read up on in Arizona that prevents someone from taking your home. As I said, I'm not an attorney, but some of this information may help you move forward. Just be sure you do all things possible to protect your client in case the whole thing backfires. I'm also curious, what is the term for the wrap before the buyer has to pay off the seller, how much is the purchase, why are they buyers doing a wrap instead of outright purchasing the home and lastly why are the sellers considering it? Best of luck to you! Stew Keene Signature Realty GroupWed, 27 May 2009 06:52:32 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Scottsdale_AZ-769058/http://www.trulia.com/voices/profile/Real_Estate_Pro-Scottsdale_AZ-769058/Thanks guys for your advise and I have already told them all of this and thought maybe someone out there would have experienced this situation. I do not and will not act as legal counsel to any buyer ever with 29 years experience I hope I have at least learned this. Again, thanks for your input. Of course, bankruptcy court will not answer this question and thought just maybe someone would have known the answer for my own edification. Regards, TheresaWed, 27 May 2009 00:59:45 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Phoenix_AZ-251898/http://www.trulia.com/voices/profile/Real_Estate_Pro-Phoenix_AZ-251898/I will strongly suggest your client pays for an attorney's consultation. Even if you know the answer you should not take on the liability - especially when you are not authorized to give legal advice. Carlos J Ramirez, PC, ABR, CNE Associate Broker, HomeSmart -Tue, 26 May 2009 23:28:10 -0700http://www.trulia.com/voices/profile/Real_Estate_Pro-Arizona-620350/http://www.trulia.com/voices/profile/Real_Estate_Pro-Arizona-620350/I would strongly urge you to consult with your Designated Broker, and then perhaps legal counsel. Best of luck! ...randyTue, 26 May 2009 23:27:40 -0700