A federal bankruptcy court in Massachusetts has derailed a debtor's attempt to extinguish a tenant's lease. In 2000, the Debtor obtained mortgage financing on the property in order to make certain improvements. As part of the loan process, the lenders entered into a nondisturbance agreement with the Tenant. The agreement stated that while the mortgage would take precedence over the lease and the other options held by the Tenant, the lenders agreed that the Tenant’s rights would not be affected by a foreclosure or other sale of the property.
In 2004, the Debtor filed a Chapter 11 bankruptcy petition and filed a motion seeking approval of the bankruptcy court to auction the property on which the Tenant was located free and clear of all interests. The Tenant opposed this motion. The court ruled in favor of the tenant.
For people who cannot afford their monthly payments and cannot refinance, and who owe more than their house is worth, a short sale may be the answer. More about short sales in a moment. Deed in lieu seems preferable. In deed in lieu, you deed your house to your mortgage lender and that ends the foreclosure process.
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Posted by: John | December 04, 2007 at 01:06 AM