If you’re active at the auction you may have experienced the situation where you are the winning bidder only to be later notified by the lender or trustee that the sale will be rescinded and your purchase money returned, usually with no good explanation. If that hasn’t happened to you yet, it will. Don’t be dismayed; good things can happen if you stand up for your rights.
That’s just what happened to the investor who bought the home owned by Representative Laura Richardson (D – Long Beach) at trustee sale that was subsequently rescinded. The media made plenty of noise about the propriety of the cancellation in which a bipartisan panel unanimously found that she did not receive an improper gift or other benefit when Washington Mutual canceled the sale. But that’s another story. The important point here is what happened to the auction investor who bought the house at trustee sale for $388,000. When Washington Mutual rescinded the sale and returned the house to Rep. Richardson, the investor brought a claim against the bank and was rewarded with a $100,000 settlement for the effort. That enviable ROI likely reflected the strength of investor of the investors case that the lender had no legal grounds for rescinding the sale. Be aware that the alleged settlement in the Richardson matter was considerably larger than we typically see in this situation, but still illustrates the value of taking the time to make sure your rights aren’t being trampled when a lender makes a mistake or changes their mind after the sale.
If you find yourself in this situation, be sure to inquire about the reason the sale is being overturned, and don’t hesitate to question if that reason is sufficient, and hire counsel if necessary to protect your rights.