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I surrendered! (No, sorry, actually you may not have)

It’s troubling to me how long it takes real estate to be foreclosed once it has been surrendered in a bankruptcy.  The length of time that lenders take to foreclose could be the subject of another blog post.


It’s more troubling to me how infrequently clients are aware of their rights.


When someone surrenders real estate as part of their bankruptcy filing, the title to the property is not transferred.  If the title to the property is not transferred, the person who filed bankruptcy is still responsible for things like property taxes, as well as any homeowners’ dues that come due after the case is filed.


I think one of three things happens:  (1) There is a miscommunication between the bankruptcy lawyer and client; (2) there is a misunderstanding of the law by the bankruptcy lawyer; or, (3) no communication at all.  What’s worse is that a client receives the discharge and is excited about the fresh start, only to receive a nasty letter months later from the Linebarger firm or homeowners’ association.


We write this information down for our clients who surrender real estate and remind them to ensure that the title was ultimately transferred.


To end the accrual of fees title must be transferred.  This can happen several ways, the most common of which is foreclosure.  In other instances, the debtor can contact the lender and work out transfer documents. No matter what, something must be done, lest the client get hassled indefinitely for all the debt that accrues for land that was surrendered.

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