BK and Subject to - Posted by Roy

Posted by David Alexander on August 22, 1999 at 24:29:49:

First, let me say I’ve never been in this situation, but my first inclination would be to tell you to get all your paperwork together, Purchase contract, Your selling contract etc. and go to the ladys bankrupty attorney, the judge etc. and try to get this property removed.

Immediately after it is released, as soon as possible put the property in a trust.

David Alexander

BK and Subject to - Posted by Roy

Posted by Roy on August 21, 1999 at 07:02:34:

I bought a house subject to, Jan 1998, I have resold it since, today the lady I sold to went to get Insurance and bill the escrow account for the Ins. The insurance agent called about geting payment and was told the loan was in bankruptcy. The lady I bought the house from has filed Bankruptcy. My question is, Where do I stand, and the New owners stand for as this property?

The loan is V A.

The Bank has been keeping my payments.

Re: BK and Subject to - Posted by JPiper

Posted by JPiper on August 22, 1999 at 09:55:27:

You left alot of details out here…but I’m assuming that when you bought the property you received a deed. What isn’t clear is how you took title (other than subject to). The other thing that isn’t clear is how you sold the property…and how your buyer took title (if they took title).

Either way, the property is not in bankruptcy…the loan on the property is. The original owner no longer owns the property, but the owner is still obligated on the loan. So that you know, the bankruptcy court has fairly wideranging powers, to include setting aside the sale of a property…although it sounds like you have owner the property long enough that this should not be a problem.

The problem at this point is that the lender is, or will be shortly, aware that the property is no longer owned by the borrower…and therefore under their due on sale clause “could” accelerate their loan. It’s possible that the lender may not be able to release funds for payment of insurance either.

You say the “bank has been keeping my payments”…which I presume means they have been cashing the checks.

My inclination would be to speak with a lawyer, find out if the bank is required to withhold disbursement for insurance under the bankruptcy laws. If that is the case I pay directly for an insurance policy…and then send a copy of it to the lender. I would then speak to the lender about this loan to see how they’re looking at it.

But perhaps before you do that you could provide a few details on the matters that you left out.