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Three years ago I signed an agreement with my cousin to purchase a house he was renting out at the time. We agreed to 40,000; notarized the agreement; my mother lives in the home; in December 2007 I will have made my final payment. He called me yesterday to tell me his lawyer misrepresented him earlier this year when he filed bankruptcy; so he now has to convert his Chapter 13 bankruptcy into a chapter 7 and the judge he saw told him I should get a quitclaim deed on the house before the bankruptcy. I'm sure the judge did not understand my cousin owes 35,000 on the refinanced house, and I have paid nearly 40,000 to him that he has not given the mortgage company. He ownes the home he lives in and the property we were to exchange, he said both are in jeopardy d/t misrepresentation by his lawyer that he claims he is suing also. I want the home I bought, but I do not want to be responsible for any monies that he owes on the home. I have paid all of the taxes for the past 3 years as well as the upkeep. What a sticky situation; he wants me to do a quitclaim today (11/29/07) before Friday (he won't clarify why before friday.
Feeling not so smart in Nebraska -Tina

larry · Joined: 27 Jun 2007 Posts: 3322 474.67 Dollars($)

Hi webtib,

Welcome to this forum.

Your brother has quitclaimed the house and you have given him $40,000 but he has not paid it to the mortgage company. So you have not bought the house. It was quitclaimed to you. That means it was gifted to you.

You want the house but you do not want to pay any thing. But the property was quitclaimed to you. So the lender may place lien on the property because you have not use a warranty deed.

I think as the house is quitclaimed to you, legally you are the owner of the property. Whether you will quitclaim the property to your brother or not, it totally depends upon you. But the lender may place a lien on the property unless and until your brother pays the due mortgage back.

Thanks,
Larry

Guest

Without a Deed of Trust, you only have an unsecured debt to him of ~$40,000. If he enters chapter 7, you will likely recover nothing. Transferring the house to you now will likely be set aside by the bankrupcy court as a preferential transfer. I'm afraid you will probably lose the house and any money you put in it.

I would hire a (creditor) bankruptcy attorney immediately to protect your interests in the house in the bankruptcy court. The bankruptcy trustee will try and get the house as part of the bankrupcy estate to sell and distribute to the creditors. You should immediately file a claim in the bankruptcy court, too.

scherzeroni · Joined: 05 Jan 2008 Posts: 51 18.77 Dollars($)

I dont think he can quit claim the house to you with the mortgage still in his name.

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Quitclaim deeds during bankruptcy