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Better than vacant? Realtor wants to live in my house...

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  • Better than vacant? Realtor wants to live in my house...

    My Chapter 13 was confirmed a few months ago. I am returning the house as part of the BK.

    I have signed a lease on an apartment - need to move for work. Moving in June.

    I stopped by the attorney's office today to talk about the details... how to handle insurance, home owners, etc... until the bank sells the property and the title is out of my name.

    He says - the issue is that the moment the insurance co. finds out that my property is vacant, they'll drop me. Says that it could take a long time to get my name off the title. Maybe 8 months, give or take.

    He also works with a guy, a realtor... says it's completely up to me, but the realtor lives in places like mine until they are sold at sheriff's sale or until he can sell them as a short sale.

    So, according to my attorney, I think the deal looks like this:

    He gets:

    - to live in my place rent free
    - commission if he can sell it on a short sale
    - he pays home owners, takes care of the lawn and utilities

    I get:

    - freedom to move away and not worry about the house or vacancy
    - likely get my name off title sooner
    - no tax or financial ramifications

    Have you heard of such a thing? The attorney says the guy has been doing this for a few years. They draw up a simple lease, I get to move, and never have to look back.

    Any advice or insights? Anything I should be looking out for? My attorney has been around this area for a long time, seems like a decent, well respected guy. Did a good job on the BK. This just all came out of the blue today.

    Thanks for any ideas you might have.

  • #2
    From other posts I have read - the insurance is not a concern. When yours cancels, the mortgage co will pick up insurance. They'll bill you, and it will be included as unsecured debt.

    I'd question this suggestion from your atty. Does atty get some sort of finders fee from the realtor? I'm guessing yes, and if so that means the atty is no longer working for you - but for the realtor's best interest.
    Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
    (In the 'planning' stage, to file ch. 13 if/when we have to.)


    • #3
      Originally posted by SMinGA View Post
      I'd question this suggestion from your atty. Does atty get some sort of finders fee from the realtor? I'm guessing yes, and if so that means the atty is no longer working for you - but for the realtor's best interest.
      And is it a benifit to the orignal poster. Yes. So WHO CARES if the attorney gets a kick back.


      • #4
        Everyone is trying to make a buck off of foreclosures. You need to watch out for any slick maneuvers by outsiders. I would contact your State DOI (Department of Insurance) to make sure what your attorney is suggesting is legitimate as to a rental situation with your name still on the deed, the property in the foreclosure process with no mortgage payments being made and a renter moving in and a lease being drawn up with that renter keeping up the house insurance. He cannot get home owners insurance in his name because the property does not belong to him and a lease is drawn up with your as the lessor (your property) and you are vacating the property? I see potential big red flags so I would get an insurance expert's opinion on this as to your state's rental laws as you could be lining yourself up for some problems.

        The attorney is recommending this to you because it's another way to make a buck off of the foreclosure process. What is going to happen here is the real estate agent is going to probably flip your property for a nice profit after doing stuff to it after moving in there. Watch it....
        Filed 5 Year Chapter 13: April 2002
        Early Buy-Out: April 2006
        Discharge: August 2006

        "A credit card is a snake in your pocket"


        • #5
          One more any wording in that supposed rental may turn out you could be actually be signing your house over to the agent. Ever see or read about the stories where the savior people show up at someone's door who is going into foreclosure with offers for them to rent to stay in their homes ... it turns out the homes actually get signed over to the folks showing up at the it...
          Filed 5 Year Chapter 13: April 2002
          Early Buy-Out: April 2006
          Discharge: August 2006

          "A credit card is a snake in your pocket"


          • #6

            Thanks for the responses. It did seem a bit odd to me.

            But just to clarify - I am way upside down on the house. I am surrendering as part of the bankruptcy... and moving about an hour away.

            That's why this is appealing - which I am sure the attorney knows very well.

            I do get that the realtor benefits, and so may the attorney. But like a previous comment said - I don't really care. I don't want to make money off of this even if I could. If the realtor sells it in a short sale, the attorney tells me that it will have no impact on me whatsoever.

            The benefit to the realtor is the commission. The benefit to me is that I get my name off of the title sooner.

            I am in Illinois. My attorney is my bankruptcy attorney for the life of the BK. I paid a one time flat fee up front. So he also has a vested interest in me NOT ending up in any sort of complicated situation. At least that's how I see it.

            The flip side is that I am having trouble putting a dollar figure on the real benefit to me.

            Without this guy living here -- I may be looking at upwards of 8 months of:

            * basic utilities
            * lawn care
            * insurance, if I can even get it
            * HOA - which is now only $18 a month, until next January

            I think I can swing these costs until this house is sold at the Sheriff's sale.

            Honestly - all I want is peace of mind and to be able to focus on my future. Not trying to whine here. Just saying it out loud, I guess.


            • #7
              As I understand it - the HOA responsibilities are a bigger issue than the insurance. I believe you are responsible for HOA fees, etc.

              If you go ahead with it, be wary of your own liability in this situation. If you're officially the landlord then you have some obligations to your tenant. Like if someone (renter or his guests) gets injured while on your property - uh oh. Personal injury damages may not be dischargable? And I suspect your homeowners insurance won't cover it once they find you rented the house out. They provide insurance for you to live there, not for you to rent it out. (Even if you're not charging rent, you're still the landlord and he is still the renter.)
              Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
              (In the 'planning' stage, to file ch. 13 if/when we have to.)


              • #8
                Consider changing the insurance to landlord/tenant type insurance if you choose to do this deal. Also make sure the "lease" makes the tenant responsible for payment of the insurance, lawn care, upkeep and HOA fees. Do read every bit of the lease as Flamingo suggests, to make sure you are getting exactly what you think you are getting/giving. As pointed out, you are a landlord even if you receive no rental payments directly. You may even want to put some sort of clause in the lease that proof of payment by the tenant shall be provided to you monthly (copy of canceled check/receipt - whatever is considered proof).
                Filed CH 7 9/30/2008
                Discharged Jan 5, 2009! Closed Jan 18, 2009

                I am not an attorney. None of my advice is legal advice in any way..


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