Short sale with discharged mortgage-obtain through quit claim?
There's a property I've had my eye on (for myself-not as an investment or flip) for a while that's been on and off the market. I finally tracked down the owner and he laid out the story for me. His business ran into trouble which forced him to file for CH7 (Including the mortgage), which has been discharged, so the note has also been discharged. He has vacated the house and has purchased another one, so all he wants is to get rid of this one. He's lined up a few buyers but the bank wants too much for the house. They keep asking him to modify which he has no interest in because he already has another house.
Given the situation, he offered to quit claim the property to me (for a fee) so that I can negotiate with the bank directly for a modification. I realize that a quit claim can open you up to any liens on the property, but to my knowledge (which I'd verify with a title search) there are no obvious ones. The mortgage (owner claims no second mortgage) has been discharged through the CH7, there is no HOA, and I verified with the town that the taxes are current.
All that said, I'd like to find out what other risks there would be in a transaction like this, and if there might be other ways to structure it. I'll be talking with an experienced real estate attorney about this tomorrow, but I'm eager to hear from others here who might have done a similar deal, or ran from one with good reason.