Buyer of Short Sale ?

[drezy01]

Hello there,
New to site. We are under contract with a seller who filed for BK13 the day before aution day on property. The short sale package was sent to lender the following week. My question is can the short sale still happen if the seller is in pending BK? The last communication we had with the seller's agent is that the lender is reviewing the package. Are we wasting our time? We really love the house.

Thanks in advance for any responses.

[HHM]

Yes, the short sale can still close. But, you have a few more hurdles now. The seller will need to get an Order Lifting the Automatic Stay and Abandonment of the Property by the Bankruptcy Estate. In short, you need to have the BK court give the seller permission to proceed with the sale.

However, in all likelihood, you probably are wasting your time. About 1 in 10 short sales ever close.

[drezy01]

Would be easier if the BK is dismissed? Reason I asked is it seems she missed her deadlines for document filing.

[lrprn]

If the house owner doesn't file all the required Ch 13 forms in time, then her case will be dismissed by the court. You could then wait for the home to go to foreclosure and when it's auctioned place your bid on it. The only competitor you are likely to have is the lender. Could be a lot less complicated than trying to close a short sale with this bk history involved. As HHM already said, the chances of the house short sale proceeding smoothly at this point with the lender are very small.

[Azatty]

Wait for the lender to approve the short sale and get the debtor to file a motion to allow the sale of the property free and clear of liens and encumbrances pursuant to 11 U.S.C. §363. All interested parties will be joined, and it's faster and cheaper than litigating stay relief and abandonment. We do it all the time. There's some risk that someone else could show up and bid, but it's extremely rare that it happens. Besides, the creditor has to institute stay relief proceedings, which could require that you wait a long time. Sometimes we file the motion for the debtor just to get the lender's attorney to appear and work with us. Simple, but effective.