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Deutsche Bank National Trust Company v. Albritton

A-7141-03T5 (N.J. Super. App. Div. 2005) (Unpublished)

FORECLOSURE; SHERIFF’S SALES — Courts have authority to set aside a sherif’s sale and to order property to be resold, but such authority is limited to when there are grounds for equitable relief such as fraud, accident, surprise or irregularly in the sale, which would make confirmation of the sale inequitable and unjust to one of the parties.

A bank obtained a judgment in foreclosure against a homeowner. The judgment was ordered to be satisfied by the sale of the mortgaged property. Two months later, a sheriff’s sale was held where the lending bank bid on the property. Prior to the sale, the bank had instructed its attorney that it would bid up to $170,000 for the property. Its attorney inadvertently told the bidding agent that the bank would only bid up to $17,000. Due to this mistake in communications, the bank was not awarded the property and it was instead sold to a bidder who offered $17,100 for the property. After the sale, the successful bidder assigned the bid to a real estate company, who later sold the property to a buyer. On the same day that the property was sold to the buyer, the bank filed an order to show cause, asserting that the sheriff’s sale should be set aside due to fraud. A hearing was held on the application after which the lower court held that the bank failed to set forth sufficient facts to set aside the sale. The bank appealed this ruling, asserting that the purchase price of the property at the sheriff’s sale was so grossly inadequate that the lower court erred in not setting aside the sale.

The Appellate Division affirmed the lower court’s ruling. It held that courts have only limited authority to set aside a sheriff’s sale. Such actions are warranted only when there is an independent ground for equitable relief such as fraud, accident, surprise or irregularly in the sale, which would make confirmation of the sale inequitable and unjust to one of the parties. The Court held that none of these factors were present to warrant the setting aside of the sale. It further ruled that a sheriff’s sale should not be set aside due to a party’s own mistake or negligence. It found that, in this case, the bank was requesting the Court to set aside the sale because of the negligence of its attorney in communicating its bid requirements to the bidding agenct. It held that this reason did not justify setting aside the sale. It also rejected the bank’s assertion that the sale should be set aside because the successful bid was grossly inadequate. The Court noted that the price could not be found to be inadequate just because it was lower than the fair market value of the property. It found that its common for the fair market value to be higher than the price paid at a sheriff’s sale.


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