Chemical Bank v. Kavulich

A-3278-96T3 (N.J. Super. App. Div. 1997) (Unpublished)
  • Opinion Date: November 3, 1997

MORTGAGES; FORECLOSURE— If a foreclosing mortgagee does not either include a post-judgment expense provision in the judgment or amend the judgment before sale, it doesn’t get its post-judgment expenses.

A first mortgagee appealed an order directing a county sheriff to turn over surplus funds from a foreclosure sale to an assignee of the second mortgagee. After the original judgment of foreclosure, the first mortgagee paid the property taxes, insurance, and maintenance costs and then sought reimbursement of those funds from the amount paid by the successful bidder at the sheriff’s sale.

The first mortgagee argued that all parties attending the sheriff’s sale were put on notice that it sought additional sums in a surplus money motion, and therefore it was entitled to recover advances made for the preservation of the mortgaged property. However, the first mortgagee failed to amend the original foreclosure judgment before the sheriff’s sale. The Appellate Division found that the applicable statute requires rejection of the first mortgagee’s claim for expenses incurred after final judgment of foreclosure, unless the judgment was amended prior to the sheriff’s sale. The Court concluded that case law permits an original judgment to incorporate a post-judgment expense provision or to allow a foreclosing mortgagee to seek amendment of the judgment, but since the first mortgagee in this case did neither, the Court refused to grant it the right to obtain post-judgment expenses out of surplus funds derived from the sale of the property.