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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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I am in escrow for purchasing a property in California. The

Resolved Question:

I am in escrow for purchasing a property in California. The seller has been dragging his feet to complete the transaction. I just learned that a month after the signing of the purchase agreement he filed for bankruptcy. The proceed from the sale of the property is enough to cover the debt secured by the property. The seller might have other debt that justify the personal bankruptcy. Does the bankruptcy give the seller the right to back away from the purchase agreement he has signed?
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 7 years ago.
Hi JACustomer,
Filing the bankruptcy does not give the seller the right to back out of the contract. However, it can shield him from any monetary damage you may seek as a result of a breach.
Customer: replied 7 years ago.

So does that mean that the seller is still obligated by the contract to continue the transaction even if the closing date has passed?

Expert:  cfortunato replied 7 years ago.
The seller is still legally obligated to the contract, despite the bankruptcy. Whether or not he is still obligated past the closing date depends on the wording of the contract. Some contracts state that they are valid only until the closing date, and invalid after that.
cfortunato and 2 other Bankruptcy Law Specialists are ready to help you
Customer: replied 7 years ago.
Expert:  cfortunato replied 7 years ago.
You're welcome! And thank you for accepting my answer!