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Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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cfortunato: XXXXX XXXXX pertains to another rental property

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cfortunato: XXXXX XXXXX pertains to another rental property that is owned tenancy by the entireties with my spouse. We purchased this investment property in cash ($220,000). This condo property (now valued at $70,000) was pledged by me five years ago to secure a business line of credit. The business (llc) filed Chapter 7 last year and the balance of the line of credit was discharged. The major bank will attempt to obtain the pledged property. However, I informed the bank that the Mortgage is defective. My wife did not sign the note with the bank officer's full knowledge. Because I had a large savings deposit, he approved the line of credit.

This bank was acquired by another big bank. The new bank made an unsuccessful attempt to get my spouse to sign a new line of credit agreement. To further complicate matters, the Title company and the bank incorrectly spelled my first name on the bank documents. In addition, an incorrect condo unit number was assigned to the bank's property lien and recorded by the County Clerk.

Is it possible for the new bank to obtain court approval to foreclose/take possession and ownership of the rental property and/or will the bank have recourse against my title company since I purchased the title insurance? Does the joint tenancy by the entireties in the state of Florida outweigh the bank's claim to take ownership of the pledged property per the unsatisfied business loan debt?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 1 year ago.

Hi JACustomer,

1) Business debts cannot be discharged in a Chapter 7 Bankruptcy.

2) Title insurance protects the person whose name is XXXXX XXXXX title - not any bank that lends money that is secured by the property that is insured.

3) Yes - the fact that the property is owned as tenants by the entirety would prevent the bank from taking the property (which is why the lender tried to also get your wife's signature on the loan).

 

I think this is what you wanted to know. If not, please let me know.
Thank you.



Customer: replied 1 year ago.

Since I signed the personal guaranty for the line of credit business loan, but filed a personal Chapter 7. Is it fair to say that the amount owed to the bank was discharged under my personal chapter 7? Also, would the bank have a valid claim against the Title Company for not picking up the clerical/human error of recording the wrong condo unit number on the property lien and county records?

Expert:  cfortunato replied 1 year ago.

1) Yes - your personal obligation to pay this business loan was discharged in your personal Chapter 7 Bankruptcy.

2) No - the bank does not have a valid claim against the title insurance company. Only the persons whose names are XXXXX XXXXX title (your and your wife) can file a claim against a title insurance company.

cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience: Bankruptcy professor.
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