What are our rights when building a home with company under Chapter 11 bankruptcy?

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What are our rights when building a home with company under Chapter 11 bankruptcy?

My family and I have been speaking with a home builder about a new home. I found out yesterday the company has filed Chapter 11. What are our rights in the event that we go into contract, they begin building our home, and then they have to file full bankruptcy? What happens to our money and/or our home and/or our contract promised warranties? What are our rights?

Asked on January 19, 2012 under Real Estate Law, Ohio

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

When a company is in a Chapter 11 bankruptcy, it means that it is a reorganization where the court after review of the bankruptcy trustee's recommendations allows the company to structure its payments to creditors in such a manner to allow it to resume operations in such a manner to continue business.

The company that you are in contract with which is in bankruptcy is still obligated to perform on the contract to build the home for you. I suggest that all money for the purchase of the home go through a formal escrow and not be paid until close of escrow where title is then given to you. This is the best way to protect your interests in this matter.


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