Legal Issues When Buying A Foreclosed Property

Many issues can arise when contemplating the purchase of a foreclosed property, particularly with respect to potential disputes regarding title or pre-existing encumbrances. Read below to learn more about foreclosed properties and the issues that may exist in connection with these properties.

Legal Issues You May Face When Purchasing a Foreclosed Property:

Title and Lien Disputes:

• As the buyer, you must ensure the title is clear of any liens. This may arise if the trustee fails to notify all relevant parties, such as the IRS, about the foreclosure sale, which can lead to surviving Liens on the property.
• If the purchase of the property did follow the proper procedure protocol, the sale may be found to be invalid, causing the buyer not to obtain a clear title to the property. 

Bona Fide Purchaser Protections:

• A Bona Fide Purchaser is someone who purchases a property for value without notice of any defects or claims against the title.
• If the sale of the foreclosed property is fraudulent, a Bona Fide Purchaser may have the title of the property challenged.

Maintenance and Condition of the Property:

• According to the California Civil Code §2929.3: “the legal owner of a foreclosed property is required to maintain the property, and failure to do so can result in civil fines imposed by governmental entities.
• You must care for the exterior of the property.
• Prevent trespassers or squatters from entering the property.
• Handle issues that may be considered or may create a public nuisance, such as excessive plant growth and standing or still water.
• Failure to maintain the property may result in financial penalties and legal issues with local authorities.

The above is not an exhaustive list of issues that may arise or exist in connection with foreclosed properties and their purchase, and it is advised that any party interested in a real estate transaction involving foreclosures retain an experienced attorney to ensure their rights are protected.

The real estate attorneys at Ghassemian Law Group, APC have years of experience handling issues associated with foreclosed properties. Contact us today with your questions or concerns, and our seasoned legal team will assist you in navigating through this complex process.