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What happens if a previous owner files bankruptcy while I am in the process of buying thier "bank owned" prop?

We are in the final process of buying our first home. It is a bank owned property and so far.....it's been a big test of our patience. Anyway, we are due to close in 6 days and we get a call today from our agent saying the banks listing agent just called and said that the previous owners of the property are filing for bankruptcy. And, per her.....nobody knows what that means for the purchase. Not our loan officers,our agent or the listing agent. So they are in trying to get in contact with the bank but, I was hoping someone knew the answer. I pray it's nothing and everything will continue forward.....so does anyone have any expierience with a situation like this?

Public Comments

1. My undserstanding of the bankruptcy law is that, if successful, the house can be protected from forclosure. Unfortunately for you, it could delay or even cancel the sale of your house. This is a question for the lawyers that should already be involved in the sale of the house.
2. It depends. If the bank was in the process of taking over the property via foreclosure, the question is: had the process gone far enough such that the bank has a perfected title. If so, you're good to go, but if not, the bankruptcy court would have to look at the foreclosure and determine if the bankrupt party has any equity in the property; if so, the court would have to dispose of it. If the court concludes that there was no equity, the foreclosure could proceed and you could take over the property from the bank. This one is messy enough to justify some lawyer time, and the bank ought to engage one because it is the bank's interests that are most at stake.
3. Before buying the home check with the bank the"current owners" use and you migt be able to assume the mortgage for it and own it that way...
4. It can only stall the process. Bankruptcy is no longer a means for deadbeats to stay in their homes. "time is of the essence" so if the bank repo'd the property, filed their notice with county before the previous owner filed bk, then that will take precedence.
5. If the bank owns it then the previous owner does not. You say it is "bank owned" are you sure? If it is bank owned then the previous owner has no say in the matter. If it is not owned by the bank then they have bo business selling it. THIS is why there is title insurance.
6. You have a real estate agent that is selling a bank-owned property that they recovered in a foreclosure proceeding. I think what happened here is the previous owner now has an attorney that is challenging the foreclosure, for possible legal mistakes. The least this will cause is a cloud on the title. With a cloud on the title the property can not be sold, because a title company will not insure it. If there were legal mistakes made the previous owners could reclaim the property. Unless you have an attorney and want to challenge this proceeding you might be on the losing end, because this could take awhile. I would have a meeting of the minds to find out my status in this situation. You need to talk to the listing agent who represent the bank. See if they are gonna return any and all of your earnest funds you have in escrow or that the closing agent might have. I hope this has been of some use to you, good luck. 'FIGHT ON"