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Chase Home Finance, LLC v. Cunder

2011 WL 6183458 (N.J. Super. App. Div. 2011) (Unpublished)

MORTGAGES; FORECLOSURE; ATTORNEYS — A lender’s attorney has no duty to a borrower to record an order vacating a sheriff’s sale and declaring that the deed and the recording of the deed were void.

A borrower defaulted on a home mortgage loan and its lender foreclosed. A judgment for foreclosure was entered, a sheriff’s sale was scheduled, and the property was sold to a third-party at the sheriff’s sale. The borrower made a motion to vacate the sale, claiming he was never notified of the sale. A court order was entered vacating the sheriff’s sale and declaring that the deed and the recording of the deed were void. The order, which did not vacate the final judgment, required the borrower to reimburse the third-party bidder for its out-of-pocket expenses in connection with the sale. The order vacating the sale was not recorded with the county clerk’s office. The borrower eventually reinstated the loan and the final judgment was vacated. Several years later, another order was issued which corrected the recording reference in the earlier order vacating the sheriff’s sale. That order was recorded with the county clerk.

The borrower once again defaulted, and the lender filed a new foreclosure complaint. The lender moved for summary judgment. The borrower opposed the motion, arguing that the lender’s foreclosure attorney was responsible for recording the original order vacating that sheriff’s sale and deed. He also alleged that, as a result of the lender’s attorney’s failure to record the order, he did not have record title to the property and was unable to refinance to lower his interest rate. The lower court disagreed and granted summary judgment. The lower court found that the order automatically restored title to the borrower, that the lender’s attorney had no legal duty to record the order in the county clerk’s office, and that the borrower or his attorney could have recorded the order on their own at any time. The borrower appealed, but the Appellate Division affirmed.

The borrower argued that the lender should not have been permitted to foreclose because its actions with respect to the prior foreclosure sale adversely affected the borrower’s rights. The Court disagreed. Instead, it agreed with the lower court’s holding that the lender’s foreclosure attorney had no duty to record the order vacating the sale. While acknowledging that an attorney may owe a duty of care to a non-client when the attorney knew or should have known the non-client would rely on her representations, that was not the case here. The Court found that the lender’s attorneys did not induce a foreseeable reliance because the order did not direct them to record it, and the borrower’s counsel could have recorded it. The Court also disagreed with the borrower’s claim that the borrower was unable to refinance the loan because he did not have record title. It noted that the borrower was mistaken as to the law, but that was not the lender’s problem. The Court agreed with the lower court that the court order restored title, and that the borrower could have proceeded to attempt to obtain financing if he was qualified. If the title search disclosed the sheriff’s sale, he could have obtained the vacated order and recorded it to clear up the issue. The borrower’s mistake as to the significance of the order vacating the sheriff’s sale was not a valid defense to the foreclosure action.

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