Investment Property Capital (IPC) just closed a real estate loan for a borrower in bankruptcy. This case was extremely complicated for several reasons:
1. Active bankruptcy,
2. Borrower was in arrears on both the 1st and 2nd notes,
3. Federal tax lien,
4. Payoffs on two dozen public and private liens had to be obtained,
5. Two recorded liens had to be removed to secure title insurance,
6. Property is a single-resident-occupancy(SRO) hotel with ground floor commercial.
Background
A husband and wife who struggled through the recession had sought protection in bankruptcy court. They had a myriad of debts that continued to accumulate default interest plus a federal tax lien that had recently surfaced. Luckily there was enough equity remaining in one of their properties that we could use it as collateral and pay off all of their bankruptcy-related debts.
However, we could not obtain title insurance until we received payoffs from two of the lien holders who were nowhere to be found, despite hiring a Private Investigator to find them. The only alternative was to have an order issued by the judge to ‘strip’ these two liens off of the title. We had the Borrower’s lawyer return to court and request that the bankruptcy judge issue the order and with this in hand, we were able to obtain title insurance and finally close.
Conclusion
There were many twists, turns and curveballs throughout the process, including some very unsavory characters who attempted to take control of the property. Cool heads and solid relationships prevailed, which allowed us to close this very complicated escrow.
All of the borrower’s obligations were paid off, which gave them a clean, fresh start. They are now relaxed, focused on rebuilding their businesses, and are no longer distracted by the bankruptcy.
If you know someone who could benefit from our expertise in providing capital solutions for either a purchase or a refinance, we appreciate your referrals. Investment Property Capital – we finance dreams and fix nightmares!