How are liens handled after a bankrupcy sale?

[Miguel M.]

I've been looking at Chapter 7 and 11 bankruptcies. In the motion to sell documents it usually states the property is "subject to all liens and encumbrances, if any" and then usually follows a list of the liens in the debtor's Schedule D. This one for example I found from case # "8:16-bk-10217-KRM" in Florida:

From what I've learnt so far, such liens survive the bankruptcy. My questions are:

1. Do the lien-holders usually call their payments due after a property changes ownership in bankrupcy court?

2. In this example, would the winning bidder have to come up with an additional ($133,656 = $26,209 + $107,447) right after the auction to satisfy the lien holders, or would s/he be able to  "assume the lien" and pay it later?

Thanks in advance!

[Jerry W.]

@Miguel M., I have very limited experience on this particular subject, but secured liens are NOT subject to discharge in a bankruptcy except in very limited cram down situations.  All proceeds from the sale go first to repay the mortgage holders in order of priority, then the rest goes to the bankruptcy trustee.  If the property is really underwater I would expect that the trustee would just grant a relief from stay for the creditor to file a foreclosure, but I am not as sure on that as it would be optional for the trustee to do this.  If the creditor does not execute a reaffirmation of the mortgage debt I cannot see why the trustee would not grant a relief from stay.  You do NOT have the right to just take over making payments on the mortgage.  The due on sale clause is triggered by the sell by the trustee.

I hope that helps.  I am sorry I am unable to state these things as a fact, they are my best recollection from many years ago.