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Bankruptcy after tenant buyer moves in

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What happens if the seller declares Bankruptcy after a tenant buyer moves in? Is this a concern if the payments are current on the loan?

 

What happens if a creditor of the seller places a lien or judgement against the property after a tenant buyer has moved in and the amount exceeds the equity int he property? Is there a way an investor can protect themselves from this?

 

Thanks,

 

Ed :rolleyes:

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Ed, although I play an attorney on TV, I am not one in real life. So take my opinions here as just that. Later on, the real deal will come by and give us the straight talk on these matters. Having said that........

What happens if the seller declares Bankruptcy after a tenant buyer moves in? Is this a concern if the payments are current on the loan?
If the loan on the property is current, it won't be included or affected by the BK.

Keep in mind that if you set up your deal as you should, your payments are not going to be made to the seller directly. You will use a third party to disburse the funds so there is no worry about whether or not Bank of America is being paid. And before you finalize said deal you will have verified that all payments are current. Having done this, the chances that the loan slips into arrears are slim to none. That's how you protect yourself.

What happens if a creditor of the seller places a lien or judgement against the property after a tenant buyer has moved in and the amount exceeds the equity int he property? Is there a way an investor can protect themselves from this?
Unfortunately, no real estate investment is 100% without risk. I've always said it is our job as smart investors to minimize the risks involved. However, don't ever let anyone tell you they can be eliminated. Now that I've scared you away from real estate, please come back, Ed.

If a homeowner has a lien placed on his property, there isn't much you can do to prevent it. It isn't commonplace, but it can happen. A well worded contract, (which you have), will address this issue and protect you to some extent should this happen.

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