24 Jul Surrender in bankruptcy doesn’t transfer title
Even if you state your intention to surrender property in your Chapter 7 bankruptcy, the creditor will still have to foreclose to relieve you of ownership.
The election or intention to “surrender” in the bankruptcy papers is really nothing more than an announcement that the debtor doesn’t intend to attempt to keep the property. Since state law governs ownership and transfer of title to real estate, a creditor with a claim secured by property still has to follow state law to cut off the present owner’s interest in the property.
Which brings me to the practical issue: liability for injury on real property follows ownership. A bankruptcy debtor owns real property until a foreclosure sale or voluntary transfer of some kind is completed. Whether or not you announced your intention to surrender, you are the owner and the person liable if someone is hurt on the property. Keep the property insured for public liability claims until title passes to someone else.
Cathy Moran, Esq.
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