gpxfiles … If you scan back a bit, I know Sean has addressed this issue in past forum post responses. While steps sale rescissions are the exception (not the rule), they do happen. This most commonly occurs when the trustee and/or lender don’t have their act together (I’m shocked, shocked). Most typical scenario is when a loan mod was in progress and the bank gave the distressed homeowner something in writing to that effect while at the same time, their foreclosure division (by whatever euphemism it’s called) was giving the trustee a green light to sell their interest in the DOT (opening bid posted and sold at steps). The other common scenario is a bankruptcy filing that was recorded and proper/timely notification was made to the foreclosing lender … yet the trustee did not get timely notice of the owner’s BK from the lender and the trustee gave the auction company a green light to sell. In such cases you may see an apoplectic homeowner at the steps waiving their BK papers and attempting to get the auctioneer to halt the auction … the auctioneers will listen and give the homeowner the fax line # where to send the properly executed BK docs … BUT the auctioneer takes their instructions from the trustee NOT the distressed homeowner … hence, if given a “green light,” (authorization) they will auction the property right then and there. These sales may later be rescinded if the homeowner proved to be in the right. As a 3rd party investor who picked up a property under the aforementioned scenario, you may simply have to accept the fact that the sale will be rescinded and you’ll get your money back without so much as a “sorry our bad.”
Please also keep in mind that not all individuals who appear at the steps (homeowners or their proxies) “waiving papers” and insisting that this sale will “not stand” are in the right. I’ve seen one or two clever attempts to thwart a sale at the steps that were not done with legitimacy. I’m not making light of homeowners’ plight… it’s often a very tragic circumstance (many got blindsided and not everyone used their home as an ATM)… but listen/look carefully when someone is waiving papers at the steps.
There are also scenarios wherein the steps sale is being rescinded due to a lawsuit filed by the distressed homeowner. The decision to rescind a “properly conducted” steps sale may be the call of the lender’s legal dept who would rather deal with you (3rd party steps buyer) versus the homeowner’s attorneys who may have a cogent legal strategy. Now it’s up to you, and your lawyers, to determine how much its worth to put up a fight? If there’s substantial equity at stake, then maybe it’s worth the effort in making the lender show cause why your steps acquisition was not bonafide. You may be able to get a settlement from the lender … particularly if it was their screwup.
You also asked about putting $ cash into the property wherein a sale is later rescinded … This can happen, but it is not that common, as you generally know within a matter of days that the sale will be (or attempt to be) rescinded. So don’t rush in with $4keys or contractors until you’ve got more clarity on the former homeowner’s disposition. If you have put $$ in and the sale is later rescinded, then you may have cause to get that $$ back from the lender.