When a homeowner fails to make mortgage payments, the lender will typically file a foreclosure action. Ultimately the lender may obtain a final judgment of foreclosure and then schedule a sheriffs sale for the property. At the sheriffs sale, the highest bidder will obtain title to the property, by a deed from the sheriff to the bidder upon payment in full of the bid price. The bidder then records the sheriffs deed with the county clerk and is then considered to be the record owner of the property.
Bidders at sheriffs sale rely on two types of notices in order to understand what they are buying. One is the sheriffs sale notice which is published in the newspaper and posted on the home being sold. The notice says when and where the sale is, the judgment amount and other pertinent information. Importantly, the notice should disclose any liens which the sale is subject to.
Similarly, at the time of the sale, the foreclosing lender will ask the employee of the sheriffs office conducting the sale to make an announcement prior to the start of bidding, as to any liens or other items that the sale is subject to. If there is a prior mortgage which is not affected by the foreclosure, that mortgage will still be a lien on the property and should be disclosed by way of the sale notice and announcement.
A client recently purchased a home at sheriffs sale which was encumbered by a substantial prior mortgage. He did not learn of the mortgage until that mortgage lender began a foreclosure of its own mortgage, and the lender’s attorney notified the client of the foreclosure proceeding. Our office was retained to file a motion to vacate the sheriffs sale, void the sheriffs deed, and direct that the foreclosing lender and sheriffs office return all monies paid to our client.
It is well established that sheriffs sales may be set aside by reason of fraud, accident, surprise, or mistake, irregularities in the conduct of the sale and so on. Clearly the failure of the foreclosing lender to disclose a prior mortgage is a significant basis for vacating the sale.
However, since our client was not a party to the foreclosure action, we also had to ask the court for leave to allow our client to intervene in the foreclosure action for the purpose of filing the motion.
Long story short is that the court granted our motion to intervene and to vacate the sale, and ordered the foreclosing lender and sheriff to refund all monies paid to our client. It should be noted that there may be time limits for filing such motions and that a fair amount of legal knowledge and expertise is needed to ensure a successful outcome. We can handle all of your real estate litigation needs.