I was told by a title company that the present owner of a property can not bid on the foreclosure auction of their own property. They said that the note could be re-attached to the property if they were the successful bidder. Is this true. Also in the State of Nevada apparently the lender is supposed to have a Certificate of Foreclosure to be able to sell the property if the owner has gone through mediation. How will this effect title if a Certificate has not been filed? Can the foreclosure sale go through? Thanks for your help.
Estate Planning Attorney
A foreclosure auction creates an “arm’s length transaction” where the property will be sold to the highest bidders. The foreclosure auction in NV is a public forum and will accept bids from anyone (including family members of the current owners).
The title company representative was probably confused regarding her company’s role in foreclosures verses short sales. In a short sale, the title company industry standard is to execute a “non-bail out” document or something similar. The documents asks the seller/owner to attest that the new purchaser of the property is a not a family member or another third party purchasing the property for the benefit of the current owners.
In NV a certificate of foreclosure is required to be filed by the lender (or agent) with the auction request. In theory, the foreclosure auction is not allowed to proceed without the certificate. However, I have experienced foreclosure were there was not certificate filed or the lender neglected the mandatory mediation process. Your remedy would be to file a claim in NV district court for fraudulent foreclosure or simply fraud.
I am a lawyer but I am not your lawyer, so get a second opinion and do not rely exclusively on my answer.
A title company isn't qualified to provide you with legal advice and I am not aware of any provision in Nevada law that would prevent a relative of the owner from bidding at the auction. After all, if the lender doesn't like the bid, they can always bid higher.
The certificate of foreclosure must be issued in order for the foreclosure sale to proceed. I am not aware of any requirement that specifies how or when the certificate must be filed however.
Hope this perspective helps!
I agree with the prior posts.
I will add that NRS 107.086 provides for owner-occupied housing that the trustee "shall not" exercise the power of sale unless they first record the Certificate regarding mediation. I presume this is owner-occupied housing as that is also a requirement for participating in Nevada’s foreclosure mediation. Assuming the property is owner-occupied the bank cannot foreclose without first recording the Certificate. The foregoing should be brought to the attention of the trustee prior to the foreclosure sale if appropriate.
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