Buying a home from a bankruptcy trustee is complicated. If a homeowner files bankruptcy, all assets owned by the homeowner are controlled by the bankruptcy trustee, and a home cannot be sold without the trustee’s approval.
Buying a Home From a Bankruptcy Trustee
The homeowner looses control of selling the home and the process of selling the home once he files for bankruptcy. The process of buying a home from a bankruptcy trustee is governed by Federal law, and the whole process is defined by the trustee, not by the homeowner and the buyer.
The Price of Buying a Home From a Bankruptcy Trustee
The trustee can approve or disapprove the selling price. The trustee can set a time months into the future and say that he will accept all offers received up to that date, and then he will decide which offer is the best one. And get ready for this. The trustee can convert the transaction from a regular sale into an auction where he tells everyone who makes an offer what the other offers are, forcing all buyers to either bid higher or drop out. The homeowner selling the home completely loses control of his home. That is because the trustee’s loyalty is to the creditors, not the homeowner and not buyers.
Losing Control Buying a Home From a Bankruptcy Trustee
The paperwork when buying a home from a bankruptcy trustee will get more complicated. The trustee will force you to sign an addendum saying that he is selling the home “as is,” which means the regular process for a home inspection or septic inspection or well inspection and credits for repairs or any discussion on repairs will not happen. Your real estate agent must understand the process and will need to draft special language to handle timelines that will change based on the trustee’s own plan and calendar.
If you’re even thinking about buying a home from a bankruptcy trustee, you may want to find a real estate agent who also has experience as an attorney and who has represented real estate clients in bankruptcy court. The process of buying a home from a bankruptcy trustee is going to be more than most buyers wish to endure.
Last Updated on September 20, 2019 by Chuck Marunde