Subject To Deal When Seller Wants to File BK

[Jimmy C.]

I have a multifamily deal where I can take the deed subject to. The underlying note is at 2%, so its very attractive.

While discussing the possibilities with the seller, I learned that they intend to file bankruptcy in the future.

Would you stay away from taking title subject to in that situation?

[Jithesh Prabhakar]

Hi @jimmy, a contract of ours finally got ratified (last week) after it got approved by the Bankruptcy court. The seller had filed Chapter 13 bankruptcy, thus had position and ownership of the property but needed approval to sell.

Depending on what type of bankruptcy, this might change. Also one thing I learnt from my experience was that the price of the property had to be justified and they would expect to see a BPO or an appraisal before approving.

In your case things are different as you would have been in a contract before they filing for bankruptcy. Note that as soon as the person files for bankruptcy, a letter will be sent to all creditors notifying the same.

I suggest you consult with a bankruptcy lawyer before you make a move.

Good luck..!

Jithesh