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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Sale of assets prior to filing bankruptcy. Posted by Ward-CA- on July 17, 2003 at 10:50 PM In Reply to: Bankruptcy Question posted by jom on July 17, 2003 at 9:04 AM : Here's a situation a friend is in: : Original owner is in trouble with some missing payments on their mortgage. My friend steps in and makes up back payments, takes property subject to mortgage and gets deed. Owner moves out. No problem. : My friend then assigns "or flips" house to another investor to clean up and rehab. This investor finishes the small rehab, puts it on the market and it sells. While in escrow the title company finds out that the original owner is in bankruptcy so they can't issue clear title. So now this investor is upset at my friend because of this. : My question is why isn't this clear title? Does it matter when the original owner went into BK? If so, what are the differences if he BK'd before and after he originally sold the property to my friend? : Thanks : jom =-=-=-=-=-=-=- Jom, If the owner-in-default sells an asset of his shortly before filing bankruptcy the Court might feel it was done to pocket the money and cheat his creditors of the sales proceeds in anticipation of filing bankruptcy. So such a sale can be set aside as a fraudulent transfer. Thus it’s obvious that a title insurance company wouldn’t want to get embroiled in a possible reversal of the sale of the property because the recent owner has just filed a bankruptcy petition. Follow Ups: How do you prevent....? jom 8:57 AM, 07/18/03 (3) Re: How do you prevent....? Michael 10:23 AM, 07/18/03 (2) Re: How do you prevent....? jom 10:26 AM, 07/18/03 (1) Re: How do you prevent....? Michael 10:52 AM, 07/18/03 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : Here's a situation a friend is in: : : Original owner is in trouble with some missing payments on their mortgage. My friend steps in and makes up back payments, takes property subject to mortgage and gets deed. Owner moves out. No problem. : : My friend then assigns "or flips" house to another investor to clean up and rehab. This investor finishes the small rehab, puts it on the market and it sells. While in escrow the title company finds out that the original owner is in bankruptcy so they can't issue clear title. So now this investor is upset at my friend because of this. : : My question is why isn't this clear title? Does it matter when the original owner went into BK? If so, what are the differences if he BK'd before and after he originally sold the property to my friend? : : Thanks : : jom : =-=-=-=-=-=-=- : Jom, : If the owner-in-default sells an asset of his shortly before filing bankruptcy : the Court might feel it was done to pocket the money and cheat his creditors of the sales proceeds in anticipation of filing bankruptcy. So such a sale can be set aside as a fraudulent transfer. : Thus it’s obvious that a title insurance company wouldn’t want to get embroiled in a possible reversal of the sale of the property because the recent owner has just filed a bankruptcy petition. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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