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HomeGuru, Can you give me some advice?

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HomeGuru, you seem to be knowledgeable in this area, so I am posing this question particularly to you. I also scanned the real estate forum and saw your presence there. Hope you can help.
My father-in-law is just about to file a Chapter 7 in New York. My husband and I want to buy his house. It was just appraised for $80,000 but he owes about $82,500 on it ($73,500 mortgage and $9,000 back taxes). I know the house is worth more than $80,000 - you know how appraisals are. We want to offer enough to pay off the mortgage and taxes, and cover his closing costs. This would require us to get a higher appraisal for mortgage purposes.
We certainly don't intend to do anything shady but I don't want to interefere with the bankruptcy. I'm wondering if our purchase and higher appraisal will be scrutinized by the Court, especially since we are family.
Can we go ahead and buy it now, or do we have to wait for the bankruptcy to be finished and discharged? I want to do it ASAP because the taxes are piling up by the day. I posted about this matter last week also, but no respose. Any advice or suggestions?


Senior Member
The cleanest way would be to close on the deal before BK is filed. If not, you would be working with the BK Trustee and paying for the Trustee's time in working on the sale. I see no reason for the Trustee to disapprove the sale since there is no profit.

The higher appraisal can go both ways. If the value is too high, the profits on the sale goes directly to the BK Court. You do not pass go and you certainly do not collect $200.

I suggest making a clean deal by accepting the appraised value and paying the difference in cash which would clear the tax lien and pay the closing costs.

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