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Deutsche Bank National Trust Company v. Roffman

A-5464-09T2 (N.J. Super. App. Div. 2011) (Unpublished)

MORTGAGES; FORECLOSURE — A sheriff’s sale cannot be set aside solely on the basis of an allegedly inadequate sale price and, a sheriff’s sale is a form of distress sale that cannot reasonably be expected to produce full fair market value.

A borrower executed a promissory note and mortgage to a bank, which later commenced a foreclosure action. The borrower did not contest the foreclosure, and a final judgment was entered covering the debt plus lawful interest. The judgment directed that the mortgaged premises be sold at a sheriff’s sale to raise and satisfy the unpaid amount. The sale was adjourned twice to afford the borrower time to negotiate a loan modification. The borrower was unable to do so and, therefore the sheriff’s sale went forward.

The borrower sought an order to invalidate the sale and to instruct the sheriff not to deliver any deed conveying title to the property. The borrower argued that the price at which the property had been sold was grossly inadequate because it was far lower than fair market value. She argued that the court should not confirm the sale because the property had not been sold at its highest and best price, as required by court rules. In support, she submitted a copy of the most recent real property tax assessment for the property; proffered a competitive market analysis, which indicated that the property could be sold for more than the auction price; and requested that the court conduct a fair market value hearing so that she could protect herself against the inequity of a large deficiency judgment.

The lower court found no irregularity in the sale, holding that the price at which the property was sold was not grossly inadequate. The court additionally refused to conduct a fair market value hearing, stating that such a hearing is only required when a mortgagee asks a court to enter a deficiency judgment against the borrower.

On appeal, the Appellate Division noted that a sheriff’s sale can not be set aside solely on the basis of an allegedly inadequate sales price. Court rules require that property be sold at its highest and best price at the time of sale, which may be different from fair market value. Further, a sheriff’s sale is a form of distress sale that cannot reasonably be expected to produce full fair market value. At oral argument during appeal, the borrower stated that she might be subject to certain tax liabilities as a result of the alleged inadequate sales price for the property; but because the borrower didn’t raise the issue at trial, she was precluded from introducing it on appeal.


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