FAQ: Do Maryland trustee sales allow a home inspection contingency?

Trustee sales are foreclosure auctions that take place at the county court houses in Maryland.  When the mortgage borrower defaults on payments, the lender will instruct the trustee under the deed of trust to conduct a public trustee sale in accordance with Maryland laws and regulations.

In normal real estate transactions, real estate professionals always recommend a home inspection so the purchaser will be fully aware of the physical condition of the property.  Unfortunately, when you purchase at a trustee sale, the property is sold in as-is condition and access is not allowed for home inspections.

The lack of knowledge of the physical condition of the property adds to the risk of the transaction and must be taken into consideration when bidding at an auction.  To make matters even worse, sometimes the property occupants will damage or strip the property before the new owner takes possession.

Generally, trustee sales are more suitable for deep pocketed investors that understand the risks.  Prospective bidders should take time to become fully aware of the foreclosure process and the factors that may impact the transaction. 

New real estate investors should proceed with great caution when considering trustee sales.  For many, the purchase of lender owned foreclosures (REO) is an alternative with fewer risks.

I recall purchasing a condominium in a very nice community. I met with the occupants and they assured me that they would leave the property in good condition. I had to go through the eviction process to gain possession. The kitchen has been stripped. All of the cabinets and the appliances had been stolen and there were holes in the walls. The police actually found the stolen property and informed me that the tenants were drug dealers. Everything had to be replaced at my expense.