New Jersey - Selling Your Home In Bankruptcy
In a recent unpublished U.S. Bankruptcy Court case, (PDF) a debtor was denied a discharge when the Court found she knowingly and fraudulently misled the Court when she sought and received permission to sell her home for $200,000 but failed to disclose the existence of an agreement which permitted her to lease the property after the sale and then buy it back in two years for $300,000. The Debtor had entered into an exclusive listing agreement with a real estate broker without Court approval to sell the home for $300,000, but sold it instead for $200,000 subject to the related lease purchase agreement. The Court also held that the sale defrauded creditors because the value of the property, in excess of mortgages and Debtor's exemption, was not realized for the benefit of the bankruptcy estate.
As a general rule, if the Seller is in bankruptcy, a court order is required for a sale and any listing of the property and the Court must be apprised of all the pertinent facts.
