Question about a deal

[Brandon Wulff]

So I have a friend of mine who is a lawyer and represents a client who wants to sell a home that he bought at an auction years ago. Here’s the details:

He bought the home at an HOA foreclosure auction, and the laws in Las Vegas back before 2015 said that if the HOA foreclosed on a home, then the deed of trust basically became null and void. So if the previous homeowner owed money on a house to a bank, that payment did not need to be made to the bank. Because of how obviously ridiculous this sounds, Nevada changed their laws in 2015 to make sure the bank got paid. However, the bank is still trying to get their money.

The court has officially ruled on this house that the bank can not collect on the old loan. However, they are appealing, and now the homeowner is trying to sell his home. If he sells the home to me, the bank can not collect from me because I am now a bona Fide purchaser, and the argument is that I bought the home based on an official court ruling, so even if the bank wins the appeal, I should still be in the clear because I bought a home on the assumption the first official court ruling.

He is selling the home for $200K, and it’s worth $315K. There’s currently someone renting it for $1450/month through February. Seller wants an all cash offer, so I was thinking of wholesaling it to another investor.

Is this a legit deal or is this something I should stay away from?

[Russell Brazil]

@Tom Gimer might be able to enlighten us here.

I think this ultimately comes down to whether a title insurance carrier will issue a policy on the property. I would absolutely not buy here without owners title insurance.