Bought home at auction; bene signed a short sale contract. Can they recind?


#1

I purchased a home at an auction.com trustees sale. I heard the beneficiary signed a short sale contract for slightly more than my winning bid three days before the trustee’s sale. The difference between my bid and the reported short sale is not material. I do not yet have the trustee’s deed upon sale (but the sale was jest several days ago). Can the trustee recind my purchase? There is no tenant and I have had the locks changed.


#2

Great question. This is a grey area, and I’ve had good success challenging trustees / bene’s when they’ve tried to overturn a sale. In certain cases they show proof that sale was legally invalid (for example a BK filed before the sale), and in those cases there is no chance you’ll keep the house. That said, even when the sale is clearly invalid, they’ve still harmed me by selling me a house they had no right to sell, so I’ve then had good success getting them to at least reimburse my costs (no luck on lost profits though).

About half the time, however, they are simply trying to wriggle out of a mess they created and don’t have any legal basis for overturning the sale. By making it clear I plan to fight, and that I know they can only rescind a sale if it is legally invalid, I’ve usually gotten them to relent and simply let me have it - even though they may have consequences elsewhere.

I’d typically say something like “Please send documentation showing the sale was legally invalid, including case law if necessary, and we can discuss how I will be reimbursed for the costs I’ve incurred due to your holding an invalid sale. If you rescind without demonstrating the sale was legally invalid, or without reimbursing my costs if it was invalid, know that I’ll be forced to have my attorney file a lis-pendens on the property to resolve this.” Obviously better if you can get to the gist of that in a more friendly way.

Please remember this is just based on my experience and I’m not an attorney. Always a good idea in this business to find an attorney you trust to run these things by.