Re:Need Some Experts Opinion!!!

If I try to get subj 2 and get the waranty deed from the seller and record it and If the seller then files for bankruptcy due to major losses on business. Can his creditors come after us since this is the buyers investment property

Home4u,

If there are no liens or judgments against the seller (clean title) when you take title to the property then the creditors of the sellers cannot come after the property or you.

However, if the seller files bankruptcy and it is not an arms length tranaction or he tranferred to you to avoid his creditors then the court can call it a fraudulent transfer an unwind the deal.

John $Cash$ Locke

Thanx for your reply but here is the deal he is facing some serious business problems. He may end up filing bankruptcy later or maybe not. In this case do u think I should get involved in this situation.

Home4u,

Your seller will have to report to the bankruptcy court any sale of property or money received among other things required by the court during a certain time period prior to the bankruptcy.

So my question would be how much equity is in the property and how much will you pay for his equity?

John $Cash$ Locke

ARV $700,000
CURRENT LOAN$540,000
Ready to walk away with $40,000. I will tell him that I can pay this amount in 12 mos. Don’t know if he’ll agree or not.

Home4u,

Personally I would not want to expain to the bankruptcy trustee how I walked away with $120K in equity after I gave him the $40K, I doubt his creditors would be happy with this also.

Since he informed you that he is contemplating bankruptcy, you had prior knowledge and this would not be considered an arms lengths transaction in my opinion.

John $Cash$ Locke

While the profit numbers seem big the same 80% rule should apply. To invest 40K puts you over that mark and heaven help you if you have vacancy. Can you cover the monthy payment for how long if your occupant crashes.

In reality if you take away a zero the court would probably not worry and you would be clear. They have a right to negate the transfer for a year and with big bucks the creditors may ask for that to happen.

Bud Branstetter,

So I follow along where are you suggesting the zero be taken from to make it OK with the court?

John $Cash$ Locke