Upon bankruptcy before completion, to whom does the property vest?

• A. The buyer
• B. The trustee in bankruptcy
• C. The seller
• D. The mortgagee

Answer: (B)

When someone goes bankrupt, all of their property automatically vests in the trustee in bankruptcy to be administered for creditors. If land is involved and the vendor becomes bankrupt before completion, the land itself becomes part of the bankrupt estate and vests in the trustee, not in the buyer or the seller. The trustee then has the authority to decide how to deal with the property—whether to complete the sale, rescind, or take another course—within the framework of the bankruptcy. The borrower remains bound only to the trustee on the contract, but ownership of the land is with the trustee.