Buying Home in Chapter 7 Bankruptcy

[mrkenneth]

Long time lurker… I am considering buying a home from a bankruptcy trustee in San Diego, CA.

The home is co-owned by the debtor and her father. Only the debtor, who owns 50% interest, has filed for chapter 7 bankruptcy.

How many days should I expect between contingency removal and bankruptcy court confirmation?

If the purchase contract is silent as to overbidding, can others at the court hearing overbid my offer? Can the debtor’s father, who is not part of the bankruptcy, buy his remaining interest for 50% of my offer price?

What is a reasonable break-up fee if somebody else buys the home after the trustee accepts my offer? Is it typically limited to actual costs incurred or can it include “time and effort” invested?

The owners currently occupy the home. What recourse is available if the owners damage the home or refuse to vacate the home?

If not specified in the purchase contracts, are overdue property taxes the responsibility of the seller or buyer?

Any advice is appreciated. Thank you!

[moneymaker]

How is the title held? Personally I would wait for the bankruptcy to be final.

[mrkenneth]

Currently, the title is held jointly by the debtor daughter and the non-debtor father. The bankruptcy trustee is authorized to sell the entire property free and clear, subject to bankruptcy court approval.

[moneymaker]

The seller would be better off selling the property after bankruptcy is final, unless they are risk of losing the property before bankruptcy is finalized. If it is held as joint tenancy then it could be the father and creditors that end up owning the house which complicates things. I guess it depends on how much equity they have and if the father still wants to live there. If there is little equity then I doubt the creditors would be interested in owning part of it.

[Author]

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