Legal Question in Real Estate Law in California

Re: other lower offer accepted

I would have to concur with Attorney Whipple. There are a hundred different reasons the bank might have done this, and it might have been unintentional, and it may be that the information you have is wrong - but irrespective, the bank has no duty to sell the property (as an REO) to the "highest bidder." They can sell to whomever they want, for whatever they want.

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Re: other lower offer accepted

First, of course it's perfectly legal for the bank to sell its REO to whomever, without regard to amount of offer. Why would it happen? I can give you a range of possibilities, and I'm sure there are many more, but this is what comes to mind:

1. Somebody at the bank screwed up.

2. The successful buyer has an existing relationship with the bank, for example keeping a $10 million business checking account with them, and so the bank showed favoritism.

3. Maybe your information about the selling price is incorrect.

4. Maybe the buyer bought a package of a couple dozen homes all at the same time, and the bank allocated the entire price equally across the lot.

5. Maybe the bank preferred the other buyer's bid because it was to be financed through that bank.

6. Maybe in addition to the cash consideration, the successful bidder gave something else, like an indemnity and hold-harmless against seconds and other junior liens, or against defects in the property.

7. Maybe the bank paid less commission by taking the other deal.

Unless you were in contract, and it doesn't sound as though you were, you probably have no recourse against the bank. By the way, I think reason #1 is most likely, especially if you have inquired and they won't discuss their reasons with you.