What risk do I take on as a buyer if the lender's notice of sale wasn't properly served on the defaulting owner?

If the required notice was not properly given to the defaulting owner, or to other parties entitled to it, the power of sale process itself can potentially be challenged as improperly conducted, which creates a real risk for a buyer who has already closed on the property. Depending on how any resulting dispute plays out, this could affect the validity of the sale or lead to litigation involving parties you had no direct dealings with, even though your own purchase was made in good faith.

This is precisely why the notice history and procedural steps leading up to a power of sale deserve close attention before you close, rather than being treated as a formality. A lawyer reviewing the file can look for evidence that proper notice was actually given and that the lender otherwise followed the required process, which reduces - though cannot entirely eliminate - the risk of a later challenge.

Title insurance is also commonly used to help address this specific category of risk, alongside careful legal review, rather than as a substitute for it.