Lease Option. Owner losing house we were buying (Utah)

[Leile]

We entered a lease option agreement and had 24 months to buy house. Now, 12 months in, owner is losing house back to the bank. Auction time is near (30-45 days out) and we are just finding out. What are our rights as tenants? My down payment/deposit of $6000 is gone and I would have liked to put a lien on the house to recover it. I plan to be a bidder on the house now, but don't know how to uncover details as to who is handling it. Owner has no info for us. Am I too late to hire a RE Atty and get results? Thank you.

First, let me state that I am not an attorney and not familiar with the specifics of Utah real estate law. Having said that, you should definitely contact a local real estate attorney to determine what, if any, options you may have. Any lien you would have placed on the property would have been subordinate to the first mortgage lien holder anyway and wiped out by the foreclosure. In other words, a subordinate or lien in second or third position would not have protected you unless the owner tried to sell the property to someone else, or refinance it.
The owner of the property certainly knows who the mortgage company is that he has (or in this case, has not) been making payments to and can provide you with their phone number. Additionally, he will have gotten letters in the mail by the attorney handling the foreclosure. If he refuses, you need to get online or go down to the courthouse and determine what lender has a lien on the property. You need to get that information and contact their Loss Mitigation department. This is the department that will be handling the foreclosure. There may be a possibility to arrange a short sale prior to the foreclosure which essentially would give you the right to buy the property at or below what the mortgage payoff is. Of course, you would have to qualify for a new mortgage or be able to pay cash.
You may also want to find out if his mortgage is assumable. It is unlikely, but a possibility. The likelihood is that as the foreclosure date approaches, the lender will get more agreeable to solutions. They may stonewall for a time, but as it approaches, they will more than likely attempt to work something out with the owner. That may or may not work depending on his current cash situation and desire to hold onto a property that he isnt living in.
In any event, there are a number of options though it will take some work and some cooperation from other parties.
Additionally, not that this will be much comfort, but in the event the property is sold at the foreclosure sale and it is taken back by the bank, dont believe the myth and hype that the sheriff will be at your house that day to move your stuff out. It is an elongated process and once they determine you are there, the likelihood is that they will have to take you through the eviction process (again, check with an attorney about Utah state law). These processes are not fast. If it is sold to a private investor at the auction, the likelihood is that they will speed up the process significantly.
So, to recap:

1. Contact attorney
2. Determine lender and contact loss mitigation department
3. Attempt to purchase the property via short sale if you can qualify for a mortgage
4. Ask if the current mortgage is assumable
5. Determine if seller is willing to work out deal with lender to save the property (typically, for a good faith payment of one mortgage payment and an agreement to recapture the past due balance over the next 12 months, they will stop the foreclosure sale)
6. Arrange for financing via private investor and go the auction yourself to buy the property outright
7. Hope this helps.

in utah, when a tenant leases a home with the option to buy but choses not to at the end of the leae agreement, what happen to the additional money applies to the option to buy? is that refundable to the tenant?

The lease should address that point. Normally payments just become rent and no other fees are paid. If that is what you are asking?