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home sale fell through

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  • home sale fell through

    Hello everyone. looking for some advice-

    Back in July I listed my home for sale, and received a very good offer, I was going to walk away with a very nice chunk of change that was going right into a savings account for a down payment on a home once I met the seasoning period for VHFA, or similar. During the course of the sale the buyers requested, a septic inspection, which revealed the leach field is failing/backing up. It must have just happened this summer. Long story short, this was verified two additional times, and thus killed the sale. New systems, which for some reason my property requires by law some fancy new system, would cost over 25K, just about all of the equity. So that wasn't an option, i couldnt' even get approved for a loan for half that. I also understand from my Agent that no one will give a buyer a loan with such a "title defect" on a property. So its unmarketable, unless someone comes along with cash and is willing to put even more into fix it up.

    I since moved out of the home as I could no longer afford the payments (realizing now, I should have just stopped paying and lived free until it was sold, doh) but I've moved out and on and am renting an apartment.

    Wondering if any one has any advice, or suggestions as to what I should do? so far, walking away may be the best option.

    I was thinking of renting the house at on a month to month basis, telling the tenants that the septic is faulty, and that if it fails completely that It wouldn't be repaired and that they would have to move out (offering back prorated months rent maybe). If I do that, and just keep the money, is that fraud? (hypothetical question!) Its probably a terrible idea.

    one last question- how does this effect a new home loan in the future? it may take years for the home to foreclose, so say it does, am I starting the seasoning period from the foreclosure date, or from my BK discharge date? if from the later, I may be motivated enough to get renters in there and catch up on the mortgage.

    Thanks for reading

  • #2
    I wish that I had some answers for you. I certainly would not waste money just to get it sold because it's simply going to be an issue. You may want to try a deed-in-lieu of foreclosure with the bank since it has been on the market and the property has issues. Maneuvering around that issue will be interesting and I just don't have any personal experience to share.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog


    I am not an attorney. Any advice provided is not legal advice.

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    • #3
      It is a terrible idea to rent out a house with a faulty sewer/septic system, because the risk outweighs the benefits. If sewage backs up into the house, the tenants could potentially sue you for damage to their property, having to move out on short notice, etc. Also, if this happens, then the house could become uninhabitable, which means it might never sell, and instead remain in your name forever. If there is an HOA, you would be forever liable to pay dues and assessments, also if the property becomes "blighted" and is condemned, you might be liable to the city/county for fines and demolition costs.

      I think your best option is to try for a DIL in order to get this property out of your name ASAP.

      Comment


      • #4
        Have you tried talking to your home insurance company? Filing a claim?

        Comment


        • #5
          Thanks for all the responses. It looks like the DIL is one of the best options at the moment. What I'm thinking though is give it a month or two and see if I'm able to sell it. It sounds like as long as I don't let it actually for clothes I avoid that blemish correct? If I don't make any payments it goes into foreclosure but as long as it doesn't actually forclose I don't have any issues correct? I can give it a month if no luck try the DIL? What do I do for that do I just call the bank do I send a letter do I need a lawyer?

          Comment


          • #6
            Since this property was discharged in a bankruptcy, you don't need to worry about any "deficiency" so you should not need an attorney. A deed-in-lieu (DIL) is pretty simple and you'd contact the banks loss mitigation (and/or bankruptcy) department. You'll have to explain that it is already been on the market but you ave having difficulty in closing a sale.
            Last edited by justbroke; 09-15-2017, 02:56 PM. Reason: corrected word
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #7
              Thank you all again. I'm not sure what "efficiency" means in this context, sorry. I did try calling my bank today, to see how the process would work, but no one is able to talk with me due to the high call volume she said. I left my name, maybe someone will call me back. Its been on the market 60 days now, showings started up again since it is back on the market went from "pending" to "for sale".

              my primary concern is that i really want the best chance to get mortgage on a small condo in a couple of years, so I'm glad that at least for now, that is still a possibility- my credit score (advantage) just hit 700 this week. yippy!

              Comment


              • #8
                Oops. I meant deficiency. Your best chance is to get this property out of your name as soon as possible.
                Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                Status: (Auto) Discharged and Closed! 5/10
                Visit My BKForum Blog: justbroke's Blog


                I am not an attorney. Any advice provided is not legal advice.

                Comment


                • #9
                  I’ve started the process for a DIL. My bank contact said that it could get a mortgage again in 2 years if I did the DIL, and 7 if I let it go into foreclosure. Maybe she didn’t see I had the Chapter 7?

                  anyone know how long the DIL might take? I wish now I had stayed in the house could be saving a ton in rent right now!

                  Comment


                  • #10
                    Oops

                    Comment


                    • #11
                      Originally posted by SeekingZero View Post
                      I’ve started the process for a DIL. My bank contact said that it could get a mortgage again in 2 years if I did the DIL, and 7 if I let it go into foreclosure. Maybe she didn’t see I had the Chapter 7?

                      anyone know how long the DIL might take? I wish now I had stayed in the house could be saving a ton in rent right now!
                      No one can guess the motivation of how quickly your bank can do a DIL. They are quick because you sign a single page, notarize it, and they take and record the document. It can be one day if the bank is motivated.

                      As for mortgages, you can get one under FHA within 1-2 years after a bankruptcy. You don't have to wait 7 years for a foreclosure unless they were talking about conventional mortgages. I don't have an answer for the waiting (seasoning) for conventional mortgages.

                      Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
                      Status: (Auto) Discharged and Closed! 5/10
                      Visit My BKForum Blog: justbroke's Blog


                      I am not an attorney. Any advice provided is not legal advice.

                      Comment


                      • #12
                        Thanks! Looks like it could be months. Very busy following the hurricanes. My lender alone said they had over 110,000 properties affected!

                        Comment

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