Consequences of walking out of an auction purchase before closing?

[Harol Silva]

Hi guys I'm just starting and learning REI. I won a bid on a property, and took the risk of the property being occupied. There was a label by front door stating the following "We found this property to be vacant and/or abandoned. This information will be reported to the mortgage holder. The mortgage holder has the right to protect this property……". So I call the bank (REO property) and they agreed to secure and give me access to finalize appraisal, but this was not a requirement for them on the conditions of the sale. Now after more than a month waiting, I got an email from the Bank stating that an inspector found a man on the porch, and he assumed the house is occupied. It was the previous owner? the tenant of the previous owner?, a squatter? who knows. So, I may have to find out who this person is or simply go to closing and be prepared to deal with this occupant.

On the other hand the bank is having trouble providing the legal corporation paper work required by my title company. here is the latest email from Title to Bank: “Please have the seller (the  bank) contact their attorney to provide the needed paperwork. The other option is to provide me: signed bylaws and all amendments thereto, a list of the current stockholders and their respective stock ownership, a list of directors and officers of the corporation. Upon receipt, I will prepare a resolution. The bank said they can not provide that. 

Another title company use regularly by the auctioneer is suggesting switching back to them and they can close without the legal paperwork my title company is requesting and they can’t fulfill.

Can I walk out of this before closing? What would be the consequences? Should take the opportunity and ask the bank to renegotiate the purchase price at a deep discount? 

Any advice? It is taking almost 2 months, my priorities have changed, and I don’t see a light at the end? 

I would appreciate any recommendation?

Thank you for reading it!

Harol

Arlington, VA