Seller filed bankruptcy 17days before closing

3 Replies

I am the buyer. Under Contract on 03/10/2018. Closing date is 04/17/2018. Normal sell. Seller was pre foreclosure starting November 2017. Seller Has equity in the house. Not a short sell. Yesterday my lender needs to send CD out to me and suddenly find out the seller filed bankruptcy on 03/30/2018. Seller and his agent didn’t disclose the bankruptcy until my lender found out yesterday afternoon. Now, the seller worked with his bankruptcy attorney to released the house yesterday afternoon. Can we still close on the house? Is the seller’s agent action legal by concealing the bankruptcy information? My cost of earnest money, inspection, appraisal and lender fee are all in the line messed up by seller filing for bankruptcy. In the state of Colorado. 

Originally posted by @Jie Zhao :

I am the buyer. Under Contract on 03/10/2018. Closing date is 04/17/2018. Normal sell. Seller was pre foreclosure starting November 2017. Seller Has equity in the house. Not a short sell. Yesterday my lender needs to send CD out to me and suddenly find out the seller filed bankruptcy on 03/30/2018. Seller and his agent didn’t disclose the bankruptcy until my lender found out yesterday afternoon. Now, the seller worked with his bankruptcy attorney to released the house yesterday afternoon. Can we still close on the house? Is the seller’s agent action legal by concealing the bankruptcy information? My cost of earnest money, inspection, appraisal and lender fee are all in the line messed up by seller filing for bankruptcy. In the state of Colorado. 

 You can not buy a house in bankruptcy without court approval. The house and all property become part of the bankruptcy estate. You have to have a bankruptcy attorney file a claim (not a lawsuit, just a claim) against the estate. The seller has an obligation to tell you that they have filed. If the agent knew, he has an obligation to tell you too. Your attorney can fill you in on the details. It is unlikely to close on 4/17/2018. 

@Jie Zhao first -
Did they file chapter 13 or 7. What state is it in ?

Did they include he house in the BK filing. In some states it is not in the BK if they want to keep it and continue making payments.

if the house has equity and it is under agreement and is in the BK you may still be able to close but not anytime soon. Have your closing agent /attorney pull the BK record

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