Legal Question in Real Estate Law in Pennsylvania

Re: foreclosure

A foreclosure proceeding does not neccessary stop the Seller from selling the house. The title report probably indicated that a lis pendens had been filed. Generally this would be resolved at closing. Your problem however is that this transaction is a "short sale" whereby the sales price the house minus the cost of sale is less than the amount the Seller owns on the mortgage. A short sale can not be determined by reviewing a title report. Only after a payoff letter is ordered and all fees including interest and attorney fees are calculated would the seller realize that the sales price is too low to cover all expenses. The bank must review the contract to see if your transaction is a bona fide sale. If the Bank feels that the sales price is substantially less than market value, it might reject the sale. If your transaction is legitimate,the sales price is close to market value, and the fees to be paid by the Seller are reasoanble, the bank would probably accept the Contract. See if some of the seller's fees (i.e. real estate broker) can be reduced.

Re: foreclosure

If your offer is large enough to extinguish all liens, including the mortgage that is foreclosing the bank has no power to reject it.

Re: foreclosure

You have lots of questions. Foreclosure is a tricky subject. If the bank believes there is enough equity in the house to cover their mortgage plus foreclosure expenses, they might prefer to simply pull the trigger and auction the property.

Without seeing the title report and contract, there is no way to tell if your lawyer dropped the ball on letting you know about the problem. Rather than sniffing around on a bulletin board, you should speak to your attorney and ask him (1) if there is a standstill agreement with the bank, (2) how close the foreclosure proceeding is to the sale (if the action was filed in the last 60 days or so, you should be able to get through the purchase in good shape, but if a referee has been appointed, things start to get dicey unless there is a standstill agreement.

Good luck.

Re: foreclosure

Prior authors offer good advice, but you should also check for yourself. If the broker knew the property was in foreclosure, you may have a claim for misrepresentation. Likewise, you may have a claim against your attorney for not revealing the results of the title search. You may even have claims against the seller. Now for the good news. You might want to contact the attorney for the foreclosing bank, to see what is happening. If you have a valid contract and are near to your closing, it might be in the interests of the bank to allow your sale to go through, so they close quickly and get their money. You give no details on your contract and the comparison of the offering price to the bank lien. Does your offer cover the amount due the bank, plus its fees for the foreclosure? If so, the bank can defer the foreclosure to give you a reasonable time period to close. They are usually cooperative, if the closing date is imminent. They do not get to keep any excess proceeds of the foreclosure sale, so they should have no interest in getting more than they are due.