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Homecomings Financial Network v. Lopez

A-3057-02T5 (N.J. Super. App. Div. 2004) (Unpublished)

SHERIFF’S SALES—Zoning or municipal code defects in a property sold at a Sheriff’s sale are not title defects which permit a bidder to cancel its bid.

A bidder successfully bid on a property at a sheriff’s sale. The property was an owner-occupied, four-family residence in two buildings. At the sale, the sheriff announced that the property was being sold “as is” and was subject to all municipal ordinances, including zoning ordinances. After the sale, but prior to the payment of the balance of the bid, the bidder inquired as to the status of land use approvals. It discovered that no municipal approvals had ever been granted for the four-family structure, and it appeared as though the certificate of occupancy had been fraudulently issued. Furthermore, it looked as though the property had multiple zoning violations committed by the previous owner. As a result, the bidder sought to be released from its bid and to have its deposit returned. The lower court ordered the deposit forfeited and directed resale of the property.

On appeal, the bidder argued that the lower court should have granted equitable relief and ordered a resale and a return of the deposit. N.J.S.A. 2A:61-16 states that relief can be granted to a sheriff’s sale bidder if there is any substantial defect in the property which would render its title unmarketable and if the defect was not disclosed in the sale advertisement. The Appellate Division held that the statute did not cover the “defect” in the case at hand because zoning or municipal code defects do not constitute title defects. In this case, all of the bidders were placed on notice that the sale was subject to zoning ordinances, including municipal ordinances. Therefore, it was the bidder’s obligation to check the municipal records before it made its bid.

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