I recently attended a real estate investor meeting, where a real estate attorney from my local area spoke with the group.
He discussed working with short sale transactions. He gave us a pretty amazing warning when dealing with short sales. He stated that he has recently seen a trend for bankruptcy courts to pursue real estate investors who flipped short sale properties for a profit.
He said that he would not have normally paid any attention to this except that some bankruptcy courts are starting to win cases, thus they can collect from these real estate investors.
Essentially, the bankruptcy courts are stating that the money they made from the deal should have been given back to the bankruptcy court to pay off existing debts tied to the parties who originally owned the property. WOW!!! That is huge!!!
He stated that he has noted that there is one great way to avoid this or prevent them from being able to collect at least. It is to disclose what you are doing with the property. Basically, you would state that you are an investor who intends to resale the property for a profit. HMMM!!! It does make sense. If the seller, the short saling lenders all agree to the terms of the contract and move forward with the transaction, they and the bankruptcy court do not have any real recourse on you, because everyone agreed to move forward with the deal even though you were buying the property for below the loan amount.
Food for thought!!! Knowledge is power!!!
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