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Jack Thomas Cairns

Jack Cairns’s Answers

4 total

  • About Foreclosures

    My wife and I are renting a home from a landlord who is going into bankruptcy court next month over the house we are renting. We are now out of a legal agreement. We were told a couple of things. it may be 2-3 months before the bank tells us t...

    Jack’s Answer

    Legislation passed in California last year added a new Section 1161b to the Code of Civil Procedure, which requires a foreclosing lender to give sixty (60) days notice to vacate to tenants or subtenants of a dwelling. There is much variation among banks, just as there is among properties but, in many cases, banks will offer a tenant some move-out money just to save the cost of an eviction and to gain certainty as to when they will get possession of the property. It's certainly worth asking.

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  • Propective buyer of bank owned new construction in NM

    Can mechanics liens be filed against new owner? how can new buyer be protected?

    Jack’s Answer

    I am a California lawyer, not admitted to practice in Mew Mexico, so take this for what it's worth. I think your best protection would be a policy of title insurance with a mechanics lien endorsement. Alternatively (or in addition) you could ask the bank for a written indemnity against mechanics lien claims. If the bank did its job properly, it should have insured the priority of its construction loan over any claims of lien, so a new title policy with lien endorsement or indemnity should not be hard to get, since the foreclosure should have wiped out any lien claims.

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  • Is this scenario considered to be a preference?

    We insisted on receiving either cash in advance or a letter of credit from a new account with shaky financials. We settled on a security deposit to be held in the event that they defaulted on their terms. Now they have filed chapter 11. Can ther...

    Jack’s Answer

    I am a California lawyer, not admitted to practice in Connecticut. In general, however, there is both good news and bad news for you. Part of the definition of a preference under the Bankruptcy Code is that it must be a payment made on account of an antecedent debt. If the money you received was from a "new account", it was not received by you on account of an existing debt and cannot be considered a preference. The bad news is that, if the money is a true "security deposit", you may be deemed to be holding the money for the benefit of the bankrupt estate and could be required to turn that money back over to the bankruptcy trustee (or debtor in possession). The ultimate outcome will turn on the language of your contract or the terms of your agreement. For example, if the payment can be characterized not as a deposit but as an advance payment for goods or services that have actually been delivered, there would be neither a preference nor an asset of the bankruptcy estate.
    In the future, you would be better off to go with the letter of credit. Though there are exceptions (beyond the scope of this reply), letters of credit are usually treated under the "independence principle" as being the direct obligation of the issuing bank, rather than an obligation or property of the debtor. Thus, recovery on an l/c can generally be had notwithstanding the bankruptcy. Personal guarantees usually receive similar treatment.

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  • What are the ramifications for breaking a real estate sales agreement?

    I accepted a sales agreement contract from a buyer for my home 1 week ago, since then I've had a change in my finances (lost my job). What happens if I now want to break the contract and not sell my home?

    Jack’s Answer

    I am a California lawyer, not admitted to practice in Georgia. Under general principles of common law, however, you may be liable for breach of contract if you fail to go through with the sale and the buyer is ready, willing and able to perform his part of the bargain. The measure of damages for breach of a contract to sell real estate is generally the difference between the contract price and the fair market value of the property. Alternatively, the buyer might elect to sue for what is called "specific performance" and to require you to go through with the sale. Most real estate purchase contracts also contain attorneys' fee provisions, which may require you to pay the buyer's attorneys' fees if he has to sue. Finally, if you had a listing agreement with a real estate broker, the broker may be entitled to recover a commission, even if the sale does not go through.
    I suggest that you be up front with your buyer and broker about your recent change in circumstances and see if there is a way to reach a negotiated solution that makes economic sense for all concerned.

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