What happens to a pending sales contract if seller files a Chapter 7?

The seller can file a Chapter 7 bankruptcy even if he is in contract to sell. The contract to sell (purchase contract) is an executory contract and the bankruptcy trustee has 60 days to accept or reject it. However, in the vast majority of cases, the property is upside down and the trustee will therefore…

If I switch financing during escrow, does the seller need to agree? (California)

Technically, yes. If you made an offer stating you would obtain a conventional loan, and then during escrow for whatever reason you must switch to an alternate financing such as an FHA loan, then the seller is not obligated to cooperate with buyer’s efforts to obtain the alternative financing. However, buyer’s failure to secure alternative…

Buyer cannot claim first-time buyer tax credit on property vested in his LLC

Facts: A buyer purchased property to use as his principal residence, taking title in the name of a limited liability company (LLC) solely owned by the buyer. The buyer claimed a first-time homebuyer credit on his individual tax return. The Internal Revenue Service (IRS) disallowed the buyer’s first-time homebuyer credit, issuing a notice of deficiency…

Escrow, the time for performance

The execution of a purchase agreement Escrow is a process employed to facilitate the closing of a transfer of real estate between two parties, typically under a primary agreement, e.g., a purchase agreement. [Calif. Financial Code §17003(a)] In mortgage transactions, escrow references the duty of the lender to receive funds from the property owner for…