I purchased a property at a trustee for $197,100. The sale had an opening bid of $22,500 posted a few days before the date of sale. I got a call from the trustee the day after the sale saying they had to cancel the sale as they posted the wrong opening bid. The correct opening bid should have been $225,000 and that is their obligation to the beneficiary. They are telling me there is case law to support their position but they have never sent me anything nor have I been able to find the case law. It is now the 5th business day after the date of sale, I have not received a return of my funds nor have they given me a definitive answer as to the outcome. Do they have any right to cancel/rescind this sale?
There are numerous instances where the trustee and or lender decides, for various reasons, not to issue the Deed and return the money. It’s a crap shoot if you would be successful in getting any money out of them. You would need an atty. who is quite familiar in representing bidders. (There aren’t that many.) If you had been around for a while and have a rep for not being a push over (involved in other fcl. litigation) you could get farther on your own.
If they already had issued the Deed before they decided to cancel it, you would have been in a slightly stronger position.
Eg. We had a novice client a few months ago who bought a property and immediately made a cash for keys deal with him. Here you had a deal where the losing owner wanted the deed issued as well as the buyer! Not only that - but the lender had opened the bidding for $100K less than the winning bid. (which was $300K less than was owed.)
So the lender got $100K more than it expected and they still wouldn’t issue the Deed. They were finally persuaded to see the light.
Sounds like it may be the trustee who owes the bene since that is not a “defect” in the sale. Usually the defects that would allow a sale to a BFP (you) to be set aside would be due to failing to notify lienholders. Give my office a call. 650.327.2900.
Julie - You will find that the excuse given most often is that
- A work out agreement was made and the property shouldn’t have gone to sale. (One dept. not talking to another.)
- A payment was made and the Trustee didn’t get word the sale should be ppd.
- The loan was paid off thru escrow, and the loan collection dept. didn’t inform the fcl. dept.
- One week we had 3 sales “overturned” - we got our money back.
We get checks returned (sales voided before Deed is issued) in about 1 out of 20 or 25 sales. We get Trustee’s Deeds voided in about one out of 100?? sales. (There is actually a somewhat std. form for doing this.)
Occasionally, if we call their bluff, we will get the Deed or actually get some money.
Of course a “legal” reason is finding out a Bk. was filed prior to the sale.
Trustee and Benef. can unwind a sale if they make a mistake. If a bidder finds out he made a mistake - tough.
Bought at sale. Good price. Get a call from Trustee that they are returning money. I asked why? A Bk. was filed.
There is a person (who shall remain nameless) who is well known for trying to mess w. bidders if he feels a deal got past him. I went on Pacer, and sure enuf, the Bk. number they had reported to them was the same last name, but slightly diff. first name in a far away county. Turns out the alleged bankrupt of course never declared this property and was a simple wage earner. Of course, nothing else would match like declared address, SS # etc.
I copied all the pertinent papers off papers. Took them a few weeks, but finally issued the Trs. Deed.
The guy causing the problem was hoping, of course, he would get a chance to bid when they republished.
Normally this “bad guy” tries to get the homeowner to file some kind of suit to tie up the buyer. In this case the owner was a developer who walked away from several units that were upside down.
Moral: IF the Trustee claims there was a Bk., spend the few cents and 10 minutes and go on Pacer and look at the file yourself. Often you will find there was a good R/S, or the Bk. was filed after the sale took place, or that there is no Bk. at all. (Get the alleged Bk. # fm. the Trustee.) Professional debtors know how to play the system. By the time the Trustee/lender realizes they’ve been had, they have to republish -another month or two free rent.
I have no idea how this case turned out but, especially after the recent California Supreme Court decision in 2013, anyone who fights this will find they are going to lose. If the sale is canceled before the trustee deed is?received the?sale may be voided if a substantive error in the foreclosure process occurred and if it may have resulted in?a materially lower?bid. And if the error is due to the trustee or auction company (e.g. misunderstanding or misstating the opening?bid price) then the buyer is out of luck.
Being a?bona fide buyer does not protect the buyer from this?kind of rescinded sale. However AFTER the trustee deed is delivered then the buyer is in a much stronger position and the buyer could have prevailed.