Legal Question in Real Estate Law in California

Re: lease option to buy/bankruptcy/homesteading

If a bankruptcy is filed, you could file an adversary claim for specific performance.

Re: lease option to buy/bankruptcy/homesteading

The homestead will do nothing, I am not a bankruptcy expert, and it may have some effct, but I would think you interest may be protected as it is against the real estate.

Joel Selik

Attorney, CA Real Estate Broker

800-894-2889

www.sandiegorealestateattorney.com

www.4thelaw.com

Re: lease option to buy/bankruptcy/homesteading

Simply filing a Declaration of Homestead will do nothing to "void" your lease/option (assuming that it is in writing and otherwise enforceable).

While I am not an expert in Bankruptcy law, it would seem to me that if your new employee currently owns the property and files a bankruptcy, that property will become a part of the bankruptcy estate. Once that happens, your employee/lessor may be able to move for an order which may have the effect of voiding your contract with her.

It sounds to me like you need to sit down with an attorney who practices in real estate law and bankruptcy law (the two frequently overlap) and discuss your situation in more detail. At that time you can have the attorney review whatever documents you may have (i.e., your lease/option agreement, etc.), and give you advice on your best course of action.

Re: lease option to buy/bankruptcy/homesteading

Go ahead and exercise your option. The BK Trustee would pick up the money from the sale, and the debtor would be out in the cold as the money from the sale to you is paid to her creditors. You've got nothing to lose. So posture yourself for her to put up or shut up about the BK.

Re: lease option to buy/bankruptcy/homesteading

Your option contract cannot be voided by the bankruptcy court, only slow things down. The trustee in BK would rather get his hands on the cash, rather than force a sale of the property.

Make sure that you make a timely exercise of the option, according to its terms.

Re: lease option to buy/bankruptcy/homesteading

You need competent legal representation right away. Purchase options can be enforced or they can be blown by mis-handling. The homestead action may not affect your option rights, but could be entangling to some extent. A bankruptcy would create greater problems, not insurmountable but certainly delaying and expensive to work through. However, I repeat, act quickly to get legal advice on how to exercise your option before bad things happen.