Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here.
When one land owner files bankruptcy, the bankruptcy court can liquidate their portion of the assets to pay that debtor's creditors.
If there is no equity in the property, the trustee won't do it.
So, value -mortgage and liens, = remaining equity.
Divide that by 2, assuming 2 owners
can also subtract costs of sale from the top too
about 6% or so.
So, if there is equity, the non-bankrupt owner can buy out the trustee's interest to get the full title.
there isn't much equity right now. However, how would the court decide what the current value of the property is?
Or they can let the trustee sell, take 1/2 of the net proceeds from the sale.
An appraisal usually does the trick
if it's still in dispute, there could be a valuation hearing
Who would do the appraisal?
The debtor would have to obtain it
any other questions?
To summarize, I either need to buy my partner out if it is determined that there is equity. Or, if not enough, the trustee would leave it alone. Or my partner could buy his half back from the trustee. Or the court seizes it, sells the whole thing and then my 1099 goes out.
Damn, that's a really raw deal for me.
You get your fair value either way
or you can buy the property in full.
You're not shortchanged.
well, the biggest issue for me is to prevent the 1099 from going out this year. I'm trying to limit my tax liability. If he's bankrupt, and the 1099 goes out, will I only be liable for half, or the whole thing?
Talk to your tax guy about that, but if you buy out the trustee, then the asset is yours 100% along with the debt
It could come down to date of settlement too, and if the terms of the settlement allocated the distribution
I see. Ok. Thanks for your time.
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