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Do I need a lawyer to sell my house?

I fell behind in my mortgage payments but before the mortgagee took my house under Power of Sale and before I declared bankruptcy, I sold it. The sale was approved by the mortgagee knowing that there will be a shortfall. After the sale became unconditional but before it actually closed, I met with the trustee and made an assignment in bankruptcy (Ontario). My realtor is telling me that I still need a lawyer to act for me to close the sale of my home. He says that I am potentially liable civilly to the buyers if I don’t have one and the sale is unable to close as a result. My trustee is telling me I do not need a real estate lawyer. Who is right? Do I need a real estate lawyer or not?

One Response to “Do I need a lawyer to sell my house?”

A licensed trustee said...

Your trustee is technically correct. Once you go declare bankruptcy, the house “vests” in your trustee; it is as though the trustee now owns the house. Since their is no equity in the house, the trustee will then release the bankruptcy estate’s interest in the house. In other words the trustee turns the house over to the mortgage holder.

Whether the house sale closes or not is now the mortgage holder’s problem. Presumably they will get in touch with the real estate agent to make sure that the proceeds of the sale go to them. The mortgage holder will have their lawyer do this on their behalf.

In general we recommend that if you are selling a house you have your lawyer involved, so that you are sure that the mortgage is discharged once the sale is completed. However, in your case, it is now the bank’s problem, so you don’t need to get a lawyer involved.

This is a complicated area, so I recommend you discuss this again with your trustee if you have any further questions.