Legal Question in Bankruptcy in California

House, purchase and rental agreement on 2nd home

My wife and I just had our 3rd child in December and we decide we should probably upgrade to a house that has more bedrooms. So we looked at some houses over the past few months and found one that we liked. I then created some flyers and a website to advertise my house for rent. I did get a man that was interested in renting my house and he signed a rental agreement and gave me $1,000 cash to hold the house for him. He said he would be back in two weeks, he had to travel for his job. It's been about 3 weeks and I haven't heard from him. I have no way to reach him, I'm stressing a bit, because I'm supposed to close on my other house in about 7-10 days. This would leave me with two properties to pay mortgages on. If he flakes on me, I have his $1,000 and that's it. I can probably handle this for 2 months and possible 3 months. After that I would be in a situation where I can not afford it anymore. That scares me a bit! If that were to happen to me, would I have to foreclose on my house? Property values are declining like crazy these days! If I ever had to be in this situation, could the house I plan on buying be taken away from me in some kind of foreclosure\bankruptcy thing or would that only affect the property in trouble?


Asked on 3/25/08, 12:08 am

1 Answer from Attorneys
Brian Whitaker Lifeline Legal, LLP

Re: House, purchase and rental agreement on 2nd home

Foreclosure is a 4-month process starting with the filing of a Notice of Default; and NODs are rarely filed before you are 3 months behind. So, even if you stopped paying for the current house, you could probably retain it for another 7 months at least. Keep trying to sell or rent it (was there anything in writing between you and the wayward renter?)

Your automatic $75,000 homestead exemption will likely protect any equity you may have in the new house; so the only way you could lose it is if you fail to keep up the payments.

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Answered on 3/31/08, 2:46 am


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