Is it possible to reverse a trustee sale? I bought a property at a trustee sale and in process of eviction through an unlawful detainer case, while the former owner has filed a fraud case against the lender. Is there a possibility that they might agree to reverse the sale?
@Sean_OToole tagging you for your input.
I’ve successfully reversed sales a few times. Only one where the owner was threatening to sue. After talking to them, I thought they had a good case, so I favored the reversal over having my funds tied up.
If you don’t already have an adversarial relationship with the owner, I’d recommend talking to them, convincing them you are also an innocent victim of the bank, and asking if they will help you reverse the sale now rather than after their case is settled so you can get your money back. That was the approach I took. My situation was perhaps a bit different because I did it before I had the deed and before the trustee distributed the funds.
Since it sounds like you are farther along, I’m wondering… did your eviction case get dismissed because of the pending lawsuit? It seems that you might be a bonafide purchaser for value, and even though the prior owner has a case against the bank, it may not change the fact that you now legally own the home and that they need to get out. I’d have my eviction attorney try to make that case in the unlawful detainer. So long as the owner did not file a list pendens before the sale, you had no notice of the dispute and since the sale predates the pending action, I think it may technically wipe out their claim against the property. They’ll still have a claim against the bank, and likely a much larger one if you successfully evict them. Has been a long time since I’ve looked at that, but it’s worth discussing with your attorney.
You likely also need an attorney to make the necessary filings to ensure you get your funds back, ideally with interest, if the sale is reversed.
Bottom line my two cents (I’m not a lawyer) would be:
- Try to build a relationship with the owner. If they have a legitimate case, it’s in your best interest to help them, as it will get your funds back sooner. And if you determine they don’t, it better informs you of your options.
- Although at odds with one above, try to push through the eviction. You may need a better attorney than some inexpensive unlawful detainer player.
- Discuss filings or lawsuits to protect your interests with a competent real estate attorney.
Thanks, @Sean_OToole, for your detailed response. I always appreciate your insights.
Is there a possibility that the previous owner and lender could conspire to reverse the trustee sale, given that they have both received funds from the trustee while the eviction case is still ongoing?
What would be my options if they do?
I doubt the prior owner and lender would “conspire” to reverse the sale, but it might be possible they could agree to do that as part of a settlement or that a judge could order it. If that were to happen, I believe you’d have a strong case against the lender. I’ve had two sales get reversed on me (separate from the ones I got reversed that I mentioned above). On both I was able to get funds returned, expenses reimbursed, and interest on my funds for the period outstanding. Fortunately, in both cases I was able to work this out with the trustee without involving the court.
I’ll be interested to hear what happens with your UD. I believe you are likely to be successful in evicting the prior owner, and that to the degree the prior owners have a case it will only result in liability for the lender, not return of the home.