Question: I purchased a home at a trustee’s sale and the former owner has contacted me to buy the home from me.  Is this something I can do or is it illegal?  I know of other investors who haven’t been able to sell the home to the former owner.

Answer: When you purchase a property at a trustee’s sale, there are no restrictions on who you can sell the property to.  If you want to sell the home to the former owner that is often an easy and fast way to make money and it is perfectly legal.  If the former borrower wanted, she could even go to the trustee’s sale herself and buy the property if she has the funds.  This can also be true in a short sale.  There is nothing in a short sale by law that prohibits you from selling the property to the former owner.  However, in many short sales (if not all) the lender approving the short sale may prohibit the subsequent sale of the property to the former owner.  This is a contractual obligation that banks impose upon the purchaser.  Therefore, if a bank does not have such a requirement, you can sell a home back to the former owner after a short sale.  However, if you accepted a contractual provision saying you would not do that, you may be liable for damages or breach of contract if you violate that term.

Information contained in this post is for informational purposes only and should not be considered legal advice. You should always contact an attorney for legal advice and not rely on information published here.