Bottom line is: if you make a mistake, it can be a very costly one in terms of assuming costs, and legal liabilities.
Your best bet for researching this is to talk to an attorney familiar with the process, or find one of the independent services that will educate on a fee for service basis. Trulia is not the best forum for this type of discussion.
As both Tina and Lance have indicated, no.
Here's a quick relative risk scale for distressed property (1 being the most risky):
1) Trustee Sale (court house steps)
2) Auction Company Sale (you bidding in a pressure environment)
3) REO (reduced disclosure requirements),
4) Short Sale (primarily risk is approval timeline)
1 thru 3 above have a higher probability for issues with Title, referred to a "Title Defect" or "Cloud on Title", which means you would not have clean/clear ownership - not a comforting thought. Some examples of situations affecting Title are:
-Outstanding future interests of others in the property
-Easements on the property
-Variations in the names of grantors and grantees
-Variations in the chain of title
-Outstanding dower interests.
-Adverse possession claims
-Existing violations of equitable servitudes or covenants
-Zoning restriction violations
Here's an interesting situation I have run into:
"REOs: How Buyers Can Avoid Hidden Unsecured Property Tax Liens"
If you enjoy the â€œthrill of the dealâ€ proceed with options 1 thru 2. If, instead, you like to know what you are getting for your money stick with Â¾ and non-distressed property.