There seems to be confusion about whether or not an owner can buy back a home after a trustee’s sale. Often I am asked if it is legal for an owner to buy back their home immediately following a trustee’s sale.
Anyone, including the former owner, can purchase a home at a trustee’s sale. It’s also perfectly legal for an investor to buy a home at a trustee’s sale and then later sell it to the former owner.
The only real issue that arises when an owner repurchases a home after a trustee’s sale relates to situations where there existed other liens on the property prior to the trustee’s sale. Generally, a trustee’s sale extinguishes junior liens. However, pursuant to Arizona law, A.R.S. §33-806, junior liens can be “re-attached” to the property if the foreclosed owner regains title. There is no clear statute of limitations on this issue. Therefore, it is possible that a junior lienholder can seek to re-attach a lien years after the repurchase. If a junior lienholder successfully re-attaches a prior lien, the lien will remain junior to any lien which arises from a purchase money loan obtained to re-purchase the property.