Why are some people buying properties with bankruptcy's?


#1

I noticed some properties were being bought at auction that had bankruptcy’s filed on them, why is that?


#2

HI Tom,
A BK provides a temporary stay of the sale until the lender can get the stay lifted and proceed with the sale. There may be a bankruptcy but if the property is going to sale then it is likely that the stay has been removed.
If it is a mistake on the part of the trustee and the property goes to sale the sale will be rescinded.


#3

Also - Professional bk. filers are now stymied when they file their 3rd bk. When the bk. filer files his 3rd bk., there is NO automatic stay. If he wants a stay against a lender foreclosing, he has to make a motion and get an order from the bk. Judge staying the sale. IOW, a lender can ignore the 3rd (or 4th etc.) bk. filing unless served w. an order.


#4

Thanks Michelle and miket, always appreciate the support from FR. So far I’ve been avoiding buying bankruptcy’s, but it sounds like its OK to buy them and the worst that could happen is that they are rescinded?


#5

Yes - The worst that can happen is the Trustee returns your money.