A New Jersey sheriffs sale is the final step of the often long process of a mortgage foreclosure. If you are a successful bidder, you give a deposit to the sheriff at the sale, and have a limited time to pay the balance, at which point you receive the sheriffs deed. If you do not timely pay the balance, you will forfeit your deposit.
There are times when a successful bidder wishes to be relieved of its bid. We have handled many such situations. This matter requires research to see if there is any defect in the foreclosure proceeding or sale that could form a basis to vacate the sale. Alternatively there may be some flaw in the title that warrants such relief. For example, the failure of lender’s counsel to disclose a prior lien in the notice of sale and in the sale day announcements is a reasonable basis for vacating the sale, because the bidder’s title is encumbered.
There is a specific New Jersey statute which permits the bidder to seek relief from its bid if the title is “unmarketable”.
The bidder always first needs to seek leave to intervene in the foreclosure action. And file a motion to vacate the sale and/or the foreclosure judgment.
In a matter I handled last year, research showed that the foreclosed owner was deceased, and that the lender’s counsel did not conduct a surrogates search which would have identified the executor of the estate to be personally served in the foreclosure. This would justify not only the setting aside of the sheriffs sale, but also potentially the vacating of the foreclosure judgment. As a result of our efforts, the sale was set aside. Please note that there are time limits for filing such a motion.
In another case, the foreclosure title was encumbered with an old mortgage and tax liens, making that title unmarketable. As a secondary basis for the motion, we argued that the lender did not properly advertise the sale, and that the lender did not properly serve required notices on the foreclosed owner. Our motion was granted and the deposit refunded to the bidder. Ultimately the goal is to recover the deposit paid by the successful bidder from the sheriff.
Most recently, we had an unusual case where a community development corporation was purchasing a property at sheriffs sale under the New Jersey Community Wealth Preservation law. That statute allows a bidder to be relieved of its bid if it is unable to obtain a mortgage. We were able to present a mortgage denial letter to the court. We also argued that the bidder could not obtain title insurance due to pending litigation about the interpretation of the statute. Again the court agreed with us and entered an order vacating the sale.
We always urge our clients to obtain title searches prior to bidding, and also to visit the property before the sale.
As an experienced New Jersey litigator dealing with foreclosure and real estate issues, I welcome your inquiries about our services. We can help with your sheriffs sale matters.
