Can I terminate a contract if the property is going into foreclosure?

I am on purchase and sale contract for a property and the seller did not disclose that they were behind on mortgage and that the property is going into foreclosure in 2 weeks. I came to know about the status through the closing attorney yesterday. I want to terminate the contract. Will I have any legal issues? If I decide to purchase the property, what should I do to make sure the bank will not come back later and possess the home?

Asked on March 23, 2012 under Real Estate Law, Georgia

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

It is your choice at this point to close escrow or not. If you decide to close escrow, there may be a problem with you being able to get good legal title to the property for the simple fact that there might not be enough equity in the property for the lender who is foreclosing to get what is owed. If that happens, then the sale might not close.

If you close escrow on the property and take title to it with a new loan, you will not have to worry about the seller's lender coming back and making trouble for you. I suggest that you consult with a real estate lawyer further about the contract you are in and which you are writing about.


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