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Land Contract in Bankruptcy
Posted: Wed Jun 19, 2013 5:39 pm
by obadiah
I was wondering if anyone here might have some insight on how a bankruptcy filing will affect property that the bankrupt has on a land contract, particularly if the homestead exemption figures into it. I am looking at it from the perspective of the person who sold the land. Our local semi-sovrun is the bankrupt and hasn't made payments in 5 years or so. He has been dancing around and delaying for a long time. The county apparently wants to sell the property for back taxes, also years in arrears. Any insight would be greatly appreciated.
Re: Land Contract in Bankruptcy
Posted: Wed Jun 19, 2013 5:53 pm
by notorial dissent
Does the bankrupt actually hold it in his name, or is it still in the name of the seller? i'm just curious because various jurisdictions treat this differently.
Also, what difference would it make to the county? If the county wants to sell it for taxes, their lien would take priority.
Re: Land Contract in Bankruptcy
Posted: Wed Jun 19, 2013 7:01 pm
by obadiah
ND,
It is still in the name of the seller, not the bankrupt. I assume the county is just trying to get their taxes. The property is probably worth about $200K in this market and the taxes are about $13K. Is there a way the title holder can get it back and just pay the county? I'm not directly involved (foaf) but I was curious.
Re: Land Contract in Bankruptcy
Posted: Wed Jun 19, 2013 7:49 pm
by notorial dissent
Depends.
If it is still in the title holder's name, then they should be paying the taxes anyway, or at least legally should be, since it is still their property as far as the county is concerned.
I would think/hope, that somewhere in the contract there was something about actually keeping current on things, and chances are that if the bankrupt is behind on the taxes, he is more than likely behind on payments as well, which again depending upon how well or poorly the contract was written, would mean he is in default to the owner, and the contract should be void at that point, but a great deal will depend on how well or poorly the contract was written.
There's a lot of depends on something like this, and the owner really needs a really good contract/real estate attorney to bail him out, since it sounds like the property would be worth retrieving.
Re: Land Contract in Bankruptcy
Posted: Wed Jun 19, 2013 8:50 pm
by obadiah
Thanks, I'll recommend that.
Re: Land Contract in Bankruptcy
Posted: Thu Jun 20, 2013 3:39 am
by Judge Roy Bean
obadiah wrote:ND,
It is still in the name of the seller, not the bankrupt. I assume the county is just trying to get their taxes. The property is probably worth about $200K in this market and the taxes are about $13K. Is there a way the title holder can get it back and just pay the county? I'm not directly involved (foaf) but I was curious.
My first suggestion is that you get out of the picture in terms of advising anyone as soon as possible - after you tell them to consult their own local counsel of the type ND suggested.
And keep in mind anyone in bankruptcy has the Bankruptcy Court and Trustee in charge of their finances - they are powerless to act.