We’re trying to purchase a foreclosure but there’s an addendum attached stating previous owners are suing bank. ?If we purchase home we understand the risk that we may have to go to court to settle legel issue. ?Can you clarify our rights and is it best to hire lawyer?
Hi Misty … In our great country, anyone can sue anybody for anything… and with foreclosures so prevalent in the last 5+ years, there have been plenty of lawsuits flying. And lenders threw gas on the litigation bonfire via the massive robo-signing scandal.?
To your question… Was the ex-homeowners’ lawsuit (lis pendens) filed before the trustee sale? Was the foreclosure by a prominent lender/servicer? Was the foreclosure before or after October 2010 (when banks 1st temporarily suspended foreclosures in wake of robo-signing)? If the lender/servicer are major institutions and the foreclosure was after Oct 2010 … then odds of winning in court shift slighty towards the lender (better procedures where instituted post robo-signing scandal). If the ex-homeowner’s suit was filed after the trustee sale, the lender may also be in a modestly improved position. But much depends on facts/merits of the case.
IF a judge were to vacate the foreclosure… odds are that plaintiffs (ex-homeowner/borrowers) would accept a cash award from the lender/servicer vs demand the return of the property. But that could be a judge’s ultimate ruling. Most probable outcome is that you would get to keep the house and this would be just be a somewhat unsettling sideshow. IF, however, the court did award the property be returned to the ‘wronged’ ex-owners (and that’s rare), the bank would have to refund your purchase price.?
The above 2-cents is worth about that, as I have no legal background?