So, once you're under contract, if the amount of the liens is more than the amount of the purchase price, the seller wouldn't be able to convey the property, and you'd be able to terminate the contract and get your earnest money back.

@Jason VoI would convey my concerns with the Trustee before incurring any legal costs. 

Do you know what kind of deed is granted, what rights are conveyed.

bill_id=201920200AB1482From what our attorney has told us the lease conveys so you would inherit the tenants at their current rental rates and would be subject to the rent caps. 

Fraudulent conveyance...If that were the case though it would be a disadvantage to banks, since the only people buying upside down deals are those who were duped into doing it.

I read the new statute as requiring the foreclosing association to choose one or the other -- either (1) foreclose the super-priority lien, in which case the property conveys free and clear or (2) foreclose more than just the priority lien balance, in which case the property conveys subject to the first trust.OP says the association chose (2)... so the first trust would not be extinguished.

I'm a good guy, I try to convey that in all of my business transactions.

If you dont think a long time family friend will serve your best interests,  I wonder how you will convey your value to future clients.

I hired KKOS for a few minor services (LLC setup, property conveyance, and 30 minute consultation). 

I wanted to convey to the seller that this no contingency offer was as solid as it gets.