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Need Help Completing Sale w/ BK Ch 13 Seller
Posted by Gary C. on February 22, 2002 at 7:44 AM
Ward: I have a problem and need some expert BK advice. Below is the situation as they occurred in chronological order. o The sellers received notices of default from the 1st and 2nd. Notices of trustee sales have not been filed.
o Subsequently, the sellers (a married couple) filed Ch. 13 last summer.
o The Ch. 13 filing includes the 2 home loans, cars, credit cards, etc..
o She agreed to sell the house to me (11/01) by assigning beneficial interest in the trust holding title (that I helped create). We placed the property into the trust but did not assign beneficial interest at this time. No consideration had been exchanged but an equity purchase agreement (per California Civil Code 1695) was executed.
o The 2nd is held by a private lender at 15% interest. This guy holds over 45 similar 2nd TDs. Apparently him and his lawyer look to take over properties when the homeowner can't make the payments.
o The lawyer for the 2nd obtained a "STIPULATION TO CONDITION THE AUTOMATIC STAY AND ORDER THEREON". In the stipulation, it allows the 2nd to file an application for an order terminating the automatic stay if the homeowner fails to make timely payments to the BK trustee and the current payments to the 1st and 2nd. If the stay is terminated by something called an Ex Parte Order, the 2nd will proceed with the foreclosure. This stipulation was signed by the BK trustee 10/01.
o The owners receive a letter from the 2nd stating that the sellers haven't paid the BK trustee and will violate the stipulation if they don't make the payments to the BK trustee by 2/15/02.
o An order permitting sale from the homeowner to me had been granted by the BK trustee on 2/12/02. I was told that I need this order for any title insurance to insure title.
o Upon receiving this order permitting sale (2/12/02), I found the total reinstatement amount from the loan servicing company for the 2nd and sent a certified check ($5,909)to them this past Tuesday. This brings their loan completely current. I gave the owners $4,600 ($3,500 now and $1100 when they move out). In exchange for the reinstatement and the $4,600, they assigned me the beneficial interest in the trust that owns the property.
o I faxed a copy of the reinstatement check to the 2nd TD's lawyer on Tuesday 2/19/02.
o On Wednesday 2/20/02, the 2nd sends a letter indicating that the payments to the BK trustee had not been made, thus violating a condition of the above stated stipulation, and therefore has filed for a motion (dated 2/20/02) to lift the stay and proceed with the foreclosure.
o He has become aware from the sellers' BK lawyer that the property has sold and stated so in the relief of stay order request. There's no recorded proof of this since the assignment of beneficial interest is off the record. QUESTION: Can he do this if I've made the loan current? From my viewpoint, he can lift the stay but he can't foreclose because the loan is current. Is it possible they won't accept my check? What should I do? Also, should I instead go back and label the consideration given to the sellers by me an 'option consideration' for an option to buy (since it doesn't violate the DOS) instead of consideration for beneficial interest in the trust? I need a quick turnaround on this one. Gary C.
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