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Ocean First Bank v. Pelcman

A-2692-03T1 (N.J. Super. App. Div. 2004) (Unpublished)

FORECLOSURE; NOTICE—New Jersey’s Court Rules require that foreclosed property owners be given notice of sale adjournment dates.

A bank foreclosed on a house, and a sheriff’s sale was scheduled. The sale was then adjourned at the owner’s request. The sale eventually took place, but was vacated after the owner notified the bank that he had filed for bankruptcy prior to the sale. The Bankruptcy Court then entered an order vacating the automatic stay of the foreclosure. Following this order, the owner filed numerous other bankruptcy petitions delaying the sheriff’s sale. The Bankruptcy Court dismissed each such petition. The sale finally took place and the property was awarded to the successful bidder. The owner then sought to vacate the sheriff’s sale claiming that he had not been given notice of the adjourned sale date. The lower court vacated the sale, and granted a stay pending appeal. Although the owner was served with notice of the original sheriff’s sale, he had not been given notice of the date on which the sale was actually conducted, or of many of the adjourned dates.

The Appellate Division noted that Rule 4:65-2 does not specify whether any further notice to the owner is required after notice of the original sheriff’s sale date. It simply states that notice of the sale must be given at least ten days before the sale, without specific reference to the original or an adjourned date. The bidder argued that the lower court erred in vacating the sheriff’s sale. He asserted that notice of the sheriff’s sale was posted and was advertised in a local newspaper in anticipation of the sale. The bidder also alleged that the owner was sent notice by certified and regular mail. However, there was no evidence that the owner received such notice. The record only demonstrated that the owner received notice of the original date for the sheriff’s sale, and not for the date of the adjourned, actual sale.

The bidder also claimed that he was an innocent third party who needed protection. However, the Court noted that he had purchased many properties at sheriff’s sales and was a sophisticated investor in the process. He had also been involved in similar prior litigation over the same issue. Therefore, although Rule 4:65-2 does not specify whether notice to the owner is required after timely notice of the original sale date is given, the Court held that, as a matter of fundamental fairness, the rules are to be construed to entitle interested parties to actual knowledge of the date on which a sale is to actually take place. For that reason, the Appellate Division affirmed the lower court’s decision to vacate the sheriff’s sale.

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