Case Law Summaries

BTD-1996 NPC 1 L.L.C. v. 350 Warren L.P.

• Opinion Date: November 14, 2001
• Real Property Law
• E-Mail

FORECLOSURE; FEES—Even if excessive when compared to a sheriff’s actual costs, the fee charged for a cancelled foreclosure sale is valid whether characterizable as a fee or a tax.

A creditor obtained a judgment in foreclosure against a debtor. Pursuant to the creditor’s request, the sheriff’s office scheduled a foreclosure sale and placed notices advertising the sale of the premises as required. Before the sale was scheduled, the creditor and debtor reached a settlement. At the creditor’s request, the sheriff canceled the foreclosure sale. The sheriff then forwarded the creditor a bill representing its fee for services rendered in connection with the foreclosure proceeding as permitted by statute. The statute provides that if a matter is settled before sale, the sheriff is entitled to one-half of the amount allowed in the event a sale actually occurred. When the creditor refused to pay the sheriff’s fee, the sheriff sued the creditor. The lower court dismissed the case, finding the fee unconstitutional as applied to the debtor. It held that the fee requested by the sheriff was disproportionate to the cost of the service provided, and therefore the fee constituted a tax. A statute imposing a tax must disclose in its title that it imposes a tax, otherwise it is invalid. The Appellate Division agreed that the fee constituted a tax because the amount charged was not proportionate to the services provided. The Supreme Court reversed. It held that fee schedules are presumed to be reasonable and are to be upheld unless competent evidence is offered to overcome the presumption. In this case, no proof was offered to show that the primary purpose of the fee was to raise revenue rather than to compensate the sheriff’s office for the cost of providing the service. Further, the longstanding history authorizing the sheriff’s office to collect a fee in connection with a foreclosure sale suggested that the Legislature intended for it to continue, whether it constituted a fee or a tax.

Copyright ©2003. Meislik & Meislik. All rights reserved.