House Construction (Need Lawyers and Other Builders Advice!)

[Liberi Fatali]

- Can you gift land to someone while in chapter 13 bankruptcy?

- Will any bank allow you to use land you've purchased (for any amount) to be appraised and whatever it appraises for used as equity towards a construction loan, as opposed to the purchase value as the equity?

- Do you have to wait 6 months - 2 years from when you purchase land to build on it?

[Gan]

Most of these questions are state specific with regards to lending laws.

What state is this going to take place in?

[Archigeek]

This one has an odd smell to it. I'd be really careful with taking a gift from someone who's in or just out of bankruptcy, as you might end up having to give the gift back, which is going to be a little difficult once you've put a house on it. Hire a lawyer.

[Gan]

"The mortgage lady said that you have to own the land for 6 months before you can build on it. Is this true? " In Texas - No. In Indiana - ?

"She also said that if you BUY land, what you PAY for it is how much it can count towards equity. So if she bought the 5 acres for $20,000, it would only be worth $20,000 in equity. The way around this is if the land was gifted to you. She said if you got gifted the 5 acres, THEN the land could be appraised, and whatever the appraisal is would count towards equity." In Texas you would pay for an appraisal regardless of gifting or purchase and a lender that deals a lot in construction loans would count the appraised value as equity. In Indiana - ?

"The problem, however, is that her dad just filed Chapter 13 bankruptcy. He tells her he can't gift land since he filed this. Can a lawyerish person confirm this? Is that true?" Based on what I've seen from a title perspective in Texas - yes. Indiana - ?

"- Is there a construction loan where you don't have to show you have over $10,000 in assets, and can have a down payment lower than 20%? " I would recommend looking at a mortgage bank/credit union/local lender for special loan packages rather than national lenders. Most lenders I know will only lend up to 80% of the value though (Texas lenders that is.)

"- Can you gift land to someone while in chapter 13 bankruptcy?"
That would be up to the court appointee, and applicable laws in Indiana, who is managing the bankruptcy (judge, attorney, etc.)

"- Will any bank allow you to use land you've purchased (for any amount) to be appraised and whatever it appraises for used as equity towards a construction loan, as opposed to the purchase value as the equity?" See above. Tell her to shop around local lenders to see if they have more lienient underwriting if Indiana llending laws allow.

"- Do you have to wait 6 months - 2 years from when you purchase land to build on it?" In Texas no. Indiana - ? Shop around with different lenders to see if this is a quirky bank rule that you can avoid by shopping around or if its something Indiana will not allow.

"If you need anymore information, let me know. I don't know what to tell her at the moment." Tell her to shop around with local lenders/credit unions/etc that she has access to. Competition is a wonderful thing.

"Oh yeah -- her dad's way around this, he says, is that by the end of November he will have sold about 25 acres for a lot of money. He says he is going to use that money to pay off most of his debt, and then file chapter 7 bankruptcy, at which point he will be able to gift the land. I thought that once you filed bankruptcy, you have to wait 6-10 years, or something? Can anyone confirm that he can do this? If so, how long would it take, generally speaking, to be able to gift the land? Could he be able to do it by the end of this year? That's what he tells her, at least." No idea - you need someone versed in Indiana bankruptcy laws for this.