Hi Everyone. I am new to the Real Estate Investing world and i have a question about something i have been unable to find answers for anywhere.
What happens to a Rest Estate Investing groups when the buyer of the home claims bankruptcy?
Thank you for all who can help. Much appreciated.
Do you mean when someone is in foreclosure?
More details if you want someone to assist.
Find a new buyer.
It depends on the structure of the investment group. Where is the house. Is it bought by the group or the individual?
Well, did you already finance them and hold a deed of trust? If so, hire a lawyer, youll need one. If you have not closed the deal and the property is in your name, your in a much safer position.
When I finance someone privately on a home, my preference is to obtain (in advance) an affidavit from the buyer giving me authority to use a commercial lien against the property for my loan.
If I did not get such an arrangement, and the buyer is in bankruptcy, then you, as the mortgage holder need to submit a claim to the bankruptcy for that security instrument. Being that it is a secured investment, it is likely that the trustee of the court will release the property from the bankruptcy in order to liquidate the property via foreclosure and salvage as much as possible from the foreclosure sale.
When financing things, as I describe in my e-book Debt for Profit, if it is an unsecured property you are financing, I will still get an affidavit from the borrower to secure a commercial lien against their real property. That way if the borrower files BK, I have a priority interest in the real property and will get paid before the mortgage company receives their first penny.
Hope this helps.
Rob