bankruptcy on new house

[Jerome Stanek]

I posted this on another forum and hope someone here has a better solution.

My nephew put a bid in on a house and paid for an inspection everything was ok except for the septic had to be pumped. he was to take the keys today but Saturday he was informed that the lady filed for bankruptcy and they can not take possession of it and the sale is off. What can he do as he needs to find a house pretty quick as his was sold.

[Wayne Lomman]

Get a lawyer to check the timeline of the transaction now. Bankruptcy lawyers try to claim everything and usually can but a transaction can usually only be overturned if it was an unfair price. An example of this is declaring bankrupt the day after you have sold your house to someone for a dollar. Get the lawyer straight onto it. Cheers

[Jon Nuckles]

Wayne is right that your nephew should talk to a lawyer. If the sale had closed prior to the bankruptcy filing, his analysis may or may not be right. If the sale had not closed prior to the filing, things are much more complicated. You can't rely on a woodworking or any other forum for advice. Talk to a lawyer with experience in bankruptcy and real estate law.

[Larry Edgerton]

I am a licensed real estate salesman, and I would agree with others, see a lawyer. If he had an accepted offer on the house from the owner, he has a good chance. If was dealing with a financial institution there are a lot of variables that an attorney needs to look at.

[Jerome Stanek]

I am a licensed real estate salesman, and I would agree with others, see a lawyer. If he had an accepted offer on the house from the owner, he has a good chance. If was dealing with a financial institution there are a lot of variables that an attorney needs to look at.

Shouldn't the realtor do this that's what they are paying for.

[Curt Harms]

Shouldn't the realtor do this that's what they are paying for.

It might depend on the state, and also the individual Realtor. For instance, in Pennsylvania a Real Estate Broker can practice real estate law, no need to involve an attorney. In New Jersey any real estate transaction must be reviewed by an attorney. So a real estate agent may or may not have had the training/certification/interest to get involved in legal proceedings.

[Jon Nuckles]

You don't want to rely on a realtor for bankruptcy advice, even if the realtor is willing to give it. Your nephew absolutely needs legal advice. Even if "his" realtor truly represents him, which is not always the case, the realtor can't be expected to know the ins and outs of a complicated set of laws that rarely come into play in the realtor's course of dealing. Lawyers and realtors have very different training and areas of knowledge and your nephew needs a lawyer.

[Jerome Stanek]

You don't want to rely on a realtor for bankruptcy advice, even if the realtor is willing to give it. Your nephew absolutely needs legal advice. Even if "his" realtor truly represents him, which is not always the case, the realtor can't be expected to know the ins and outs of a complicated set of laws that rarely come into play in the realtor's course of dealing. Lawyers and realtors have very different training and areas of knowledge and your nephew needs a lawyer.


At this point what is the point of a lawyer. The bankruptcy court is now in charge and all assets are frozen

[Scott Brader]

At this point what is the point of a lawyer. The bankruptcy court is now in charge and all assets are frozen

That may or may not be true. A lawyer could tell you whether the timing of the deal precludes the bankruptcy. It might be a, "Too bad, so sad," scenario, but spending a few bucks on an attorney to make sure his interests are properly protected would be worth it.

[Ken Fitzgerald]

Was there "earnest money" involved? Was there a signed contract BEFORE the lady filed for bankruptcy?

Timing is everything. If he wants the house, I'd talk with a realty lawyer in the area where this happened.

[Matt Meiser]

Short answer: Only a lawyer from his area can give him a straight answer.

My opinion: If the closing didn't yet occur I can't imagine there's much value in pursuing anything. At best after a lot of time you might get the bankruptcy court to let the sale happen. The inspection funds would be lost of course if the sale doesn't happen since that's between the buyer and inspection company, a loss of a few hundred dollars I would assume. Realtor should be able to answer the question about how earnest funds are handled. Here they are held in escrow and the seller can't get them unless the sale closes--its to the point where the deposit here is fairly small as its almost meaningless. They are released by back to the buyer after the seller signs a simple form. IIRC, the check we wrote never actually even got cashed--they just physically held the check. Probably best to try to buy another house as fast as possible since legal fees, rent, and other costs for temporary housing while waiting for the courts will probably exceed any loss.

[John C Cox]

Cut and run. Its now in the hands of the court - and will likely be tied up for months... Then - the credit of the current owner will be wrecked.... So they wont be able to buy a house for 5-7 years, hence may not be selling the house...

There are plenty of houses on the market. Get your earnest money back (its held in escrow) and head on down the road.