Home Buying in San Antonio>Question Details

Me, Home Buyer in New York, NY

Can a homeowner declaring bankruptcy after we have signed contract to buy their house?

Asked by Me, New York, NY Tue Apr 7, 2009

We have already signed the single family residential contract, the very next day the present homeowners filed for bankruptcy. Is this going to affect our ability to buy the house? We have already negotiated all the terms, they are having a contractor start the minor repairs that the inspector felt needed to be repaired, and we have secured a mortgage. Now we are ready to close and the title company is telling us we can't close before 4/19 b/c the owners filed for bankruptcy and their creditors have 20 days to do something and then a 10 day grace period after that. Is it possible that something could happen that could make us lose the house? If so, what recourse might we have to make back some of the money we have already spent on this? Including what recourse might we have considering we have already sublet the apt we live in now for May 1st?

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This is a dangerous area for Realtors to wander. Find a bankrupcy attorney and secondly find a real estate attorney and listen to both of them. Doing the wrong thing here in violation of the bankrupcy rules can land you in contempt of court.
Don Reser, Realtor/Attorney
0 votes Thank Flag Link Sat May 2, 2009

Danny and Matt have basically laid it out for you. If I was your Realtor I would be pushing like crazy to get this house closed FAST! I'm also sure the listing agent would be singing the same tune. The attorney that you should get will be there to guide you in
case things do go south and you don't get the house. Once you close though, those old debts and even possible filed liens on the property should be already addressed and washed off once you close and become the new owner. That is the title companies job to ensure that happens, but I have heard some horror stories out there.. and that's why there is title insurance.

Best of success.

God Bless,

Web Reference: http://www.eXposedHomes.com
0 votes Thank Flag Link Wed Apr 8, 2009

Your best bet is to contact a real estate attorney and speak with your agent (if you have one). This becomes a legal matter and depending on what state you're buying in the laws (and your rights in the contract) may be different (you're listed as New York, but you've posted in San Antonio, TX). I would not complicate matters further by getting advice from anyone other than a qualified real estate attorney.

Good luck to you!
0 votes Thank Flag Link Tue Apr 7, 2009
I do not know the Homestead laws of New York, but the federal bankruptcy laws are all the same. We are not to give legal advise but let us assume you have no homestead laws to protect the seller and just the federal bankruptcy laws. You will purchase the home and the profits will go to the court to distribute to list of debtors.
This does not make any difference to you, just to the seller. Anything not protected by some homestead or other law must be sold and the proceeds distributed.
You may have made a better deal because of this situation. But do conult an atty.
0 votes Thank Flag Link Tue Apr 7, 2009
Hi Me,

Very scary indeed! Since you are buying in NY, I assume that you already have a real estate attorney, and are either in 3 day review or just past it. Talk to your attorney, straight-away. If you don't have one, then get one and bring your contract.

Please keep us updated - we'd like to know how this pans out, and what the lawyer says.
0 votes Thank Flag Link Tue Apr 7, 2009
Get a lawyer fast - it is unlikely their creditors will stop you from buying, but they may try to grab some of the proceeds... It helps no one not to close... The title company will actually protect you so that you don't have any creditors going after you, even though the debts were not yours...

So, I would be optimistic... Do you have a realtor? If so, they should be able to sirect you to the proper representation.

Never a dull moment!
0 votes Thank Flag Link Tue Apr 7, 2009
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