Property transaction problem

[flyingsquirrel]

I was going to close a property next week, but then my lawyer told me that the previous owner was on a high ratio mortgage and the money he makes from selling the house may not cover all his loans. I checked his lender, it is under the Charpter 11!!!

Let's say if the transaction is ok. If he did not pay in full his property tax, am I going to be responsible for that?

Can I check if he owns the government any money?



Anyone has experience with this?

 

[2ndstory]

These are questions your lawyer should be answering. It sounds like your lawyer told you what was happening but never told you what he was going to do about it or if he could. Is this a lawyer you use often? Are the debts against the mortgage that the vendor has on his house?



Nik

 

[flyingsquirrel]

I think I should go talk to the lawyer more about this.

The only thing I know is that he has a high ratio mortgage and he is going to pay a lot for canceling it before mature. I hope he did not leave me any unpaid property tax and liens.

 

[BarryMcGuire]

Your lawyer's job, and how they protect you, is to make sure that if you pay the purchase price, you won't get saddled with the seller's mortgage, outstanding taxes or other financial issues. Your best bet is to talk to your lawyer and confirm the above.



Hope this helps,

Barry

 

[2ndstory]

Exactly what Barry said. You need to build your team and make sure you have a lawyer that is experienced in real estate and makes your business his priority.



Nik

 

[Thomas Beyer]

The seller may not have the funds to cover the mortgage plus payout penalties plus outstanding taxes.



Your lawyer will send seller's lawyer instructions called "an undertaking" to provide the title free and clear and pay all taxes.



The seller's lawyer knows that and may not be able to do it as the seller may not have enough cash.



There is a chance therefore that

a) you get a property where you are the owner legally, but the first mortgage doesn't get paid, or

b) you get a property where you are the owner legally, but taxes are owing, or

c) that the transaction doesn't close



If a) or b) happens, despite your lawyers clear instructions to seller's lawyer, you will have to either roll that transaction back later or sue the seller and/or his lawyer.



Hence, clear instructions to your lawyer that option c) is the preferred option if seller doesn't have the cash is what you should do in that case !

 

[2ndstory]

You may also be able to assume their mortgage, but unless the terms are decent, you may not want that. You could have your lawyer look into that as an option. The bank will have a figure that needs to be covered.



Nik

 

[flyingsquirrel]

The deal is suppose to be closed on tuesday.

I do not think it is going to happen.

The lender of the previous filed the charpter 11...

This make it more complicated.

The other lawyer is not too responsive. My lawyer sent many request for update and they did not send anything back. Not even a fax saying they are still working on it.

 

[Pheenix]

Just to be clear, is the lender an American company, (Chapter 11 is a US bankruptcy procedure, although this may not be material for your question)? Is the property in Canada or the States?



First thing is to try and get a deferred closing - you need time for your lawyer to determine what is going on if there is not going to be sufficient proceeds to clear the liens, etc. The vendor has to come up with the difference. This presumes you still want the property.

 

[flyingsquirrel]

This is a Canada company.

ACCERDITED HOME LENDERS CANADA FUNDING CORP.

When I search their website in the internet. I find this.

https://www.accredhome.com/

Their security cert expired already.

If you are not brace enough to enter the site.



Here is what I see in there.



For information on Accredited Home Lenders` Chapter 11 filing,

please call 877-788-2813 or visit http://www.kccllc.net/accredited

 

[Pheenix]

Quick look suggests the Canadian arm was shut down fast and the parent was out of California and the bankruypcy is a wind-down, being handled in Delaware.



Remember it is the vendor's problem in reality, so whatever work you do may not be helpful or productive.



If your lawyer is not having success with the vendor or their lawyer, you could contact a local mortgage broker who was dealing with Accredited locally, to determine what they are having clients do. Failing a clear response contact the 'Debtors lawyer' listed on the web site and see if they can put you in touch with some one (no harm asking if the mortgage value could be discounted if paid out).

 

[flyingsquirrel]

Thank you so much for the suggestion.

I will try to make some contacts.

 

[flyingsquirrel]

Thank you so much for the suggestion.

I will try to make some contacts.

 

[housingrental]

Sorry to read... What happened?