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Yardville National Bank v. Bell Roofing & Maintenance Services

A-2464-06T1 (N.J. Super. App. Div. 2008) (Unpublished)

FORECLOSURE; INTERVENORS — A buyer at a foreclosure sale has not legal claim in the foreclosure action at the time the final judgment was entered, and therefore has no right to intervene in the foreclosure action, even if attempting to have an otherwise remaining lien set aside in that action.

A mortgagee brought a foreclosure action against its mortgagors as well as against a second mortgagee of the same property. In that action, it asserted that the second mortgagee’s mortgage was subordinate to the first mortgagee’s mortgage. The second mortgagee was dismissed as a party, the lower court issued a final judgment for foreclosure, and the second mortgagee then entered into a subordination agreement with the first mortgagee. The property was advertised for a sheriff’s sale subject to the amount owed to the second mortgagee. A buyer submitted the highest bid for the property, but sought additional time to argue that the second mortgagee was still a party to the foreclosure action and also to argue that the second mortgagee’s attempt to establish priority over the first mortgagee was wrongful. The buyer, who purchased a seventy percent interest in the property along with a thirty percent holder, argued that the foreclosure extinguished the second mortgagee’s lien on the property and that the sheriff’s sale should have been vacated. The lower court considered the buyer’s argument as an attempt to intervene in the proceedings and denied her requests. The court did not address the validity of her claims but found that the subject matter of her requests constituted new actions if she chose to pursue them.

On appeal, the Appellate Division noted that there was a greater burden on a party that seeks to intervene in a matter after a final judgment has been issued than on one who attempts to intervene before entry of judgment. It also noted that the buyer had no legal claim in the foreclosure action at the time the final judgment was entered and that her interest did not arise until she purchased the property at the sheriff’s sale. The Court found that the buyer was aware of the second mortgagee’s priority claim on the property following the judgment of foreclosure and that she never provided any legal basis for intervention. The Court also rejected her argument that the mortgagors were prejudiced because they did not consent to the second mortgagee’s dismissal from the matter and pointed out that in most cases, a party that believes it has a claim does not have the right or standing to argue in the interest of a third party. Further, the Court found that the stipulation between the first and the second mortgagees, dismissing claims against the second mortgagee, was properly reached. No abuse of discretion was found on the part of the lower court and its decision was affirmed.

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