Tip 30-2011: Bankruptcy, Foreclosure & Short Sales

(Bankruptcy, Foreclosure & Short Sales) 

A previous Tucker’s Tip (#2–2011) discussed how a bankruptcy filing will cause problems and delays if the bankrupt seller is trying to sell his house. However, the bankruptcy filing will also stop any foreclosure of the bankrupt’s real estate.  Immediately upon the filing of a Chapter 7 (liquidation) or Chapter 13 (wage earners plan), any pending foreclosure is cancelled.

There is an “automatic stay” of the foreclosure until there is either an order to lift the stay, abandon the property, or discharge the bankruptcy. Until this order is entered by the bankruptcy judge, all foreclosures are delayed. These orders can take months to be entered. It depends on how fast the lender acts to request that the stay is lifted, and then, once an order is entered, how soon it begins a new foreclosure proceeding.

In a short sale situation, a bankruptcy filing by the Seller can add additional months to obtain a contract and/or negotiate a successful short sale.  In addition, the Seller may be able to continue to occupy the house.

The best advice for a seller contemplating bankruptcy is to consult with a bankruptcy attorney first, and then maybe a real estate attorney. If the seller has already filed a bankruptcy before listing the house, then the seller should consult with the bankruptcy attorney about when he can complete the sale of the property.

Please contact our firm if you have questions or need legal advice.  

Tucker Griffin Barnes - Where deep insight equals powerful advantage.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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Tip 29-2011: Propane/Fuel Oil Proration

(Propane/Fuel Oil Proration)   

A prior Tucker’s Tip, #21-2009, discussed problems with obtaining a reading from the propane company and the calculation of the amount of the credit as provided in Paragraph 9 of the VAR Contract of Purchase.  Paragraph 9 provides that the “Purchaser agrees to pay Seller for all fuel, oil and/or propane remaining in the tank at the prevailing market price as of date of settlement.”

Sometimes the parties to the closing forget about the propane purchase until the last minute, which may cause a problem at the closing table.  A good practice is to make sure that everyone involved with the closing is aware that there is propane or fuel oil which needs to be prorated.  This information should be provided at the very beginning of the contract negotiations and passed on to all parties, including the settlement attorneys involved in the transactions.

As the measurement of the propane or fuel oil does not occur until just before closing, it is a good idea to keep reminding everyone that the propane bill will be coming.  With today’s fuel prices, a full tank can create a very large payment that the Purchasers will have to pay at closing.

Please contact our firm if you have questions or need legal advice.  

Tucker Griffin Barnes - Where deep insight equals powerful advantage.

Senior Partner

William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia
434-973-7474
Tucker@TGBLaw.com
www.TGBLaw.com

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