Chemical Bank v. Saada

A-2674-96T2 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: February 3, 1998

FORECLOSURE—A sheriff’s foreclosure sale may be set aside based upon inadequacy of price and a proven mistake that frustrates the purpose of the sale.

A bank mortgagee obtained a foreclosure judgment. Prior to the sheriff’s sale, the mortgagor’s parents offered to purchase the property from the bank, but the bank felt their final offer of $525,000 was inadequate. The bank instructed its attorney to bid up to $535,000 at the sheriff’s sale, but the attorney made a mistake in copying the instructions onto a piece of paper and wrote down $335,000 instead. At the sale, the bank attorney stopped bidding at $335,000 and the mortgagor’s mother ended up the highest bidder at $392,000. The attorney for the bank discovered his error and sought to invalidate the sale. The motion judge concluded that the mortgagor’s mother most probably understood that a mistake had been made by the bank and set aside the sheriff’s sale. The judge considered the value of the property listed on the mortgagor’s bankruptcy schedule as well as the negotiations between the bank and the mortgagor’s parents. A new sale was held and the bank prevailed with a bid of $392,300. The mortgagor appealed the order setting aside the first sale.

The Appellate Division stated that the entire foreclosure remedy is discretionary and a sheriff’s sale is merely the Chancery Division judge’s exercise of the court’s equitable jurisdiction to do substantial justice between the parties. Inadequacy of price and a proven mistake which frustrate the purpose of a sheriff’s sale are factors a judge may consider when deciding whether to invalidate such a sale. The Appellate Division concluded that the motion judge properly, and within the limits of his discretion, invalidated the first sale.