Karoutas V. Homefeed Bank Case Summary
When a buyer purchases residential property from a seller in a standard resale transaction, the seller is required to offer a real estate transfer disclosure statement to the buyer which describes items in the chosen property which, if known, would affect the buyer's interest in the purchase of the property. Such a declaration is standard practice in this state, and this requirement protects buyers against unknown problems which may accompany such purchases.
This protection is not always available to a buyer in some situations such as those encountered at the trustees' sales. Incidentally, those who buy properties offered by the REO lenders acquiring properties at the trustee's sale also do not receive a real estate transfer disclosure statement from that lender. …show more content…
If you have been in the foreclosure business for a number of years (and there are a large number of such people), you may recall a famous case (Karoutas v.
HomeFed Bank (1991) Cal.App.3d.767). In this case, a beneficiary and its counsel in a non-judicial foreclosure knew of important facts concerning a property to be sold at the courthouse steps but did not disclose those facts to the bidders at the sale. The missing disclosures were significant in determining the value of the chosen property. The court found that the beneficiary owed a duty to disclose to potential bidders known problems with the
property.
Such disclosures would, of course, tend to discourage uninformed bidders from participating in the sale to the detriment of the foreclosing lender. This may have been the motivation for non-disclosure in this case.
If you have attended the sales yourself over the years, you may have seen some interaction between attendees at the trustees' sales which also could affect subsequent bidding.
The way that people interact when at the trustees' sales is not to be taken lightly. To be more explicit, there are discussions between potential bidders at the trustees' sales which could be illegal and possibly result in civil or criminal action for either or both parties. So, it pays to know the boundaries which cover those situations.
Some bidders have been known to discourage others from bidding on properties in which they have an interest. Some may agree at the sale to allocate subsequent bidding so that all share in lower bid prices between those involved. California Civil Code Section 2924h(g) takes a strong stance against such collusion calling it "chilling" the bid which can result in criminal action against the participants. You may think that such a legal stance would defer any serious conversations of this nature at the sales, but in fact collusion occasionally does occur at the trustees' sales in a few of the more active and competitive counties.
Bidders should know however that the criers at the trustees' sales do not offer details about the property condition, loan priorities, current balance on senior debt, or similar information which can be of interest to those bidding. It should be equally clear that those who don't know the rights and responsibilities which accompany the purchase of a property at the trustee's sales, do so with little protection against serious disaster
Article Source: http://EzineArticles.com/7539334
This protection is not always available to a buyer in some situations such as those encountered at the trustees' sales. Incidentally, those who buy properties offered by the REO lenders acquiring properties at the trustee's sale also do not receive a real estate transfer disclosure statement from that lender. …show more content…
If you have been in the foreclosure business for a number of years (and there are a large number of such people), you may recall a famous case (Karoutas v.
HomeFed Bank (1991) Cal.App.3d.767). In this case, a beneficiary and its counsel in a non-judicial foreclosure knew of important facts concerning a property to be sold at the courthouse steps but did not disclose those facts to the bidders at the sale. The missing disclosures were significant in determining the value of the chosen property. The court found that the beneficiary owed a duty to disclose to potential bidders known problems with the
property.
Such disclosures would, of course, tend to discourage uninformed bidders from participating in the sale to the detriment of the foreclosing lender. This may have been the motivation for non-disclosure in this case.
If you have attended the sales yourself over the years, you may have seen some interaction between attendees at the trustees' sales which also could affect subsequent bidding.
The way that people interact when at the trustees' sales is not to be taken lightly. To be more explicit, there are discussions between potential bidders at the trustees' sales which could be illegal and possibly result in civil or criminal action for either or both parties. So, it pays to know the boundaries which cover those situations.
Some bidders have been known to discourage others from bidding on properties in which they have an interest. Some may agree at the sale to allocate subsequent bidding so that all share in lower bid prices between those involved. California Civil Code Section 2924h(g) takes a strong stance against such collusion calling it "chilling" the bid which can result in criminal action against the participants. You may think that such a legal stance would defer any serious conversations of this nature at the sales, but in fact collusion occasionally does occur at the trustees' sales in a few of the more active and competitive counties.
Bidders should know however that the criers at the trustees' sales do not offer details about the property condition, loan priorities, current balance on senior debt, or similar information which can be of interest to those bidding. It should be equally clear that those who don't know the rights and responsibilities which accompany the purchase of a property at the trustee's sales, do so with little protection against serious disaster
Article Source: http://EzineArticles.com/7539334