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Just trying to understand how a transaction would work when…

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Just trying to understand how...
Just trying to understand how a transaction would work when a seller has filed bankruptcy. We have a contract on a house where this is the case - we live in NC. The seller has just disclosed that the bankruptcy hearing is scheduled for XXXXX - however, our due diligence deadline is XXXXXX! We won't even know if the bankruptcy trustee determines the home can be sold until after our DD date, correcct?
We've gone through an appraisal, inspection and are now stuck on the repairs addendeum as the seller is dragging her heels in response...
Submitted: 2 years ago.Category: Bankruptcy Law
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Answered in 27 minutes by:
5/29/2015
Bankruptcy Lawyer: socrateaser, Attorney replied 2 years ago
socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39,875
Experience: Attorney and Real Estate Broker -- Retired
Verified
Hello, What you have is called an "executory contract." The bankruptcy trustee has the power to "affirm" (accept) or reject the contract. If the contract is affirmed, then you will be allowed to complete the transaction, as it appears in the contract. If rejected, then you have a claim for damages against the debtor's bankruptcy estate. Whether or not the debtor's estate has any assets with which to pay those damages is unknown (usually not, but if the house has equity, then it's possible). At this point, you cannot force the contract to closing, because that would be a violation of the bankruptcy stay. You could file a motion for on grounds that you will be damaged if you have to wait. What I would do is contact the bankruptcy trustee, explain the situation, and see if he would be willing to not object to your motion for relief from stay. If he says, "yes" (and he probably will), then you would file the motion, and the court could let the transaction proceed unimpaired. In some jurisdictions, the bankruptcy court has local forms with which you can file a motion for relief from stay. In others, there are no forms, and you would have to know how to draft a legal pleading. If you really want this house, you may have to hire a bankruptcy lawyer to assist you -- It's a bit of a tricky exercise, what you're trying to accomplish. I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer -- otherwise, I receive nothing for my efforts in your behalf.Thanks again for using justanswer.com!
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Bankruptcy Lawyer: socrateaser, Attorney replied 2 years ago
Errata: The phrase: "You could file a motion for on grounds...," should read: "You could file a motion for relief from stay on grounds...." My apologies.
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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39,875
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Experience: Attorney and Real Estate Broker -- Retired

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