My daughter bought a house in Rhode Island that was 'owned' by a bank after the owner of the house filed chapter 7. She put down a deposit, paid for 3 inspections due to mold issues, was given the right to go into the mold infested area and repair the damage and rid the mold from the house. Her out of pocket expense, apart from her deposit, is about $3000. The house was due to close in about two weeks. She just received a letter from the bank saying that the original owner of the house had changed his chapter 7 to a chapter 13, and does not want to sell the house. The change appears to have happened before the house was listed for sale by the bank. Did the bank illegally sell this house to my daughter? Does she have any legal recourse to get her expenses back, plus any other costs that may come up? (legal, escrow, etc.). The paperwork only states that she is entitled to her deposit back, but it sounds to me like the bank had no right to sell the house to begin with. Can the owner come back on my daughter for 'damages' if he thinks she has damaged the house, or is meanspirited, or is looking for money? Thanks for any advise.

I recommend that she speak to an attorney right away.

Most will give an initial consultation at no charge.

This is to involved for her to try to take care of on her own.

I think the bank can be held liable for any expenses she incurred. She acted in good faith on the bank's instructions. She may have to take them to small claims court but she should win.

If her expenses alone were $3,000, I don't think she can qualify for small claims.

My jurisdiction limit is $2,700.

Unless the contract had a clause allowing the bank to cancel in this type of situation, the bank is in breach of the contract. They should definitely have to reimburse her for all of her costs. She needs to carefully read every word of the contract to see if there is any mention about the bank having the right to cancel. If there is nothing there about this situation then she should demand the return of her deposit plus all of her damages.