BK7
Ok. I'm in AZ and I have a friend that is about to file Chapter 7 BK and he is including his home in the BK. He has fully retained an attorney and has a 'date filed' (I'm not sure of the date), but has not gone any further at of yet. My question is can I purchase this home from him...the lender...??? Who would I purchase it from & would I be able to get it for a very good deal? How do I go about this, I've never done this before.
While I have dealt with properties in foreclosure and not in BK, it would seem that the bank would not care if you bought the property from your friend. It would pay off the debt to the bank and settle that portion of your friends debt. They may not want to fincance it for you given your relationship with the owner, but they may. The best place to start would be with your friends attorney and ask him if it would be possible. As far as a good deal that would all depend on the numbers. What is the pay off amount? How old is the note or how much equity is there? Is your friend looking for any money from the deal or just to get out from under the debt? Can you resell the property for more than you can buy? Hope this helped some.
As I see it, u have 2 choices. Here is a quick Bankruptcy101 for u: The filing of bankruptcy triggers an automatic stay meaning all suits (including foreclosure), attempts to collect money, demands, etc. are "suspended" until either the bankruptcy case is completed (the bankruptcy is discharged) or a creditor seeks relief from the stay.
You can contract with the seller/owner when the stay is in effect but you will need approval of the sale by the bankruptcy trustee. Alternatively you can wait for the bank to seek relief from stay (which they will do since they are a secured creditor and seek only to foreclose on the property NOT the seller) in which case u will not need approval.
In that case you just contract with the purchaser no approval is necessary.
J
J
jorge121,
Does this mean that if an owner is currently in foreclosure (the lender has a relief of stay) and wants to sell me their home, I do not need to contact the Bankruptcy Trustee for approval to purchase the home from the owner?
Mrs. Meltzer
I found out today that the account is not in BK anymore since some paperwork was filed incorrectly. It is now in forclosure, though the process has not started. It is 8 months past due. I am working w the lender on a short sale. A new problem arises, however, there is a tax lein as well as the HOA has put a lein out on the propery for unpaid fees. My question now is what is a decent price to offer in the short sale? He owes $164K and the home is valued at $170K. The tax leins are approx $3K and the HOA is approx $800.
Just a quick follow up to Jorge121's posting (by the way Jorge121 you are definitely dialed-on your BK vocab and procedure. I'm glad you're giving out good, well-informed info).
There still may be an issue of abandonment. Even after the creditor has an order terminating the stay, the debtor still cannot "sell" the property in a short sale or by another means, unless the Trustee files a Notice of Abandonment. This is because the debtor cannot transfer or dispose of any property of the estate duing the case, as the debtor technically does not own anything - the Trustee owns all the debtor's "stuff."
Its really just a technicality, and sometimes it can be a pain in the ass, when you have a nice quick short-sale lined up and the Trustee wants to review H.U.D's and settlement doc's.
Alternatively, if the BK case is a "No Asset" case and the Trustee has filed a No Asset report with the court - the Trustee abandons all property back to the debtor by virtue of the filing of this report. If this is the case, then the debtor can sell (and you can buy) anything you want from the debtor.
Hopes this helps and doesn’t confuse you further.
-MLM
Thanks Utah-Bkatty. Bankruptcy was never my practice but I've represented enough clients who have sued individuals who later file for bankruptcy to have developed a flavor for it.
To answer Mrs. Meltzers question, once the lender's motion for relief from stay is granted the property is no longer part of the estate and thd lender can proceed with the foreclosure. Because the lender is a secured creditor it is permitted to proceed against the property; it may not however go after the debtor for any claimed deficiency (please correct me if I've missed anything Utah_Bkatty).
J
jorge121,
Can *I* purchase the home from the owner pre-foreclosure?
It is my understanding that I must get approval from the bankruptcy trustee to purchase the property from the owner irregardless if the lender has a relief of stay, even if the Foreclosure Sale is only a week away.
Thanks,
Mrs. Meltzer
yes, if the property has been taken out of the bankruptcy estate (abandonment by the trustee for example) then you will be dealing directly with the owner. if its still part of the estate then the contract must be approved by the trustee.
The home is no longer in BK, the owner filed the paperwork incorrectly, so now it is in forclosure w/ the current mortgage lender. Is is possible for me to purchase out of pre-forclosure now? There are tax & HOA liens. I am ordering a title search now to see if there are federal or state tax liens. If there are no federal or state tax liens at this time, and I purchase the home (even tho the current owner is due for fed/state taxes back to 2000) would I ever be liable for those taxes?