Sub2 a house that's in bankruptcy?

Question

Came across a pretty sweet situation for a sub2. But he's in Ch.13 bankruptcy and so is the house. His attorney says he can sell at any time (not sure what would happen to any proceeds he would receive). Can I essentially have the property deeded to me like a regular sub2 deal, or does the bankruptcy break this deal? P.S. I completely understand I need to speak with a RE attorney and that nobody on here is "giving legal advice". I just want general thoughts or possibly anyone who has had experience with this situation.

Scenario:

- Owner doesn't want anything but to be relieved of the pmt

- Equity about 17%

- Payment $1500

- Potential Rent $1750

- ARV $190K

- Repairs $3.5k

- Arrearages $10k

- Loan Balance $145k

Thanks in advance BP community.

Scenario:

- Owner doesn't want anything but to be relieved of the pmt

- Equity about 17%

- Payment $1500

- Potential Rent $1750

- ARV $190K

- Repairs $3.5k

- Arrearages $10k

- Loan Balance $145k

Thanks in advance BP community.

Jairus King · Answer

I would love to hear more on this issue... I am in the same boat. Owner is single and went BK. The property is behind 4 months. Similar to you in a sub 2 deal we would catch him up. They are trying to sell, but its not happening in manner were he pays the balance of the loan off, maybe short sell or they take a loss? Currently I am in preliminary talks with the Portfolio manager to determine if we "can" get the loan current and performing again. Ill keep ya posted with mine.

Chris Silvas · Answer

Several of those questions I would have to figure out. He is married, have not done title search. Yes, I do have the $13k, no shady stuff lol

Thanks for the reply @Steve Vaughan

Patrick Diamond · Answer

How's this going @jairus king?

Chris Silvas · Answer

very interested to see what happens as far as the title company

Chris Silvas · Answer

That sounds great @Jairus King! You will have to give a summary of the situation and the subsequent solution after it's all said and done. Keep me posted man. I'm glad to hear someone is actually doing it.

Jairus King · Answer

Well so far we are inching forward in the deal. He claims that it wasn't part of the bankruptcy and sent me the paperwork... Only weird thing is I really can't tell what this means as the paperwork doesn't really itemize kinda like I thought i would. I am guessing that the title search will reveal if there are additional liens on the property. I have the real estate attorney checking into it as well. Worse case is that if there is a BK lien by the trustee then I can simply buy it from myself after awhile for the market value or balance. (There isn't a huge equity spread 10K), but there are long term paying tenants, no repairs needed, and a good neighborhood.

Chris Silvas · Answer

I actually had offered to rent the place from the guy and try to make a spread by subletting. Interesting concept. I agree what happens when you try to sell. Very tricky stuff.

Jairus King · Answer

Okay gotta a few updates just by looking around. Hope this at least helps a little. It really seems to depend on the status of the BK. In my case it was discharged, which is good however this doesn't mean the case is closed. Additionally common consensus is that if the lender stills has the loan they still don't want a foreclosure and will likely accept efforts to bring the loan current. This part of the sub 2 deal would work. BUUUUT- The concern that I am looking into now is what happens when we try to sell? If there is a lien on the property or based on the terms of how the  BK ended any proceeds could be taken to satisfy the owner's debt. So in changing the exit strategy perhaps I end up on the hook after renting the property out for a number of years to simply purchase it for myself and keep it as a performing rental. Thoughts anyone?

Chris Silvas · Answer

Any other insight?

Sub2 a house that's in bankruptcy?

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