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Investors & Lenders v. Finnegan

Decided: March 20, 1991.


McGann, Jr., J.s.c.


Civil Action


Once again*fn1 the failure of the Legislature to regulate the terms and conditions under which Sheriff's are to conduct execution sales, leads to unnecessary litigation as well as lack of state-wide uniformity in the conduct of such sales.

The facts are these. Investors & Lenders foreclosed on a second mortgage in the face amount of $20,000 it held on the Finnegan residence property. On July 14, 1988 default was entered against the Finnegans. On that same date an Amendment to the Complaint was filed adding First Fidelity Bank as a party defendant by virtue of a third mortgage in the face amount of $30,000 which it held on the property. Final Judgment in foreclosure was signed and filed on December 15, 1988. The third mortgage was not reported on in that judgment. The amount due to Investors & Lenders was fixed at $23,719.22

plus costs of $603.05. A writ of execution directing the Sheriff of Monmouth County to sell the property issued that same day. The Sheriff duly advertised the sale and on February 26, 1990 the property was struck off to Debbie Yaniga and James Marando on their bid of $88,000. They signed the standard conditions of Sale and paid a deposit of $21,000.*fn2 The certification of Debbie Yaniga (not disputed by any other party hereto) states:

3. The bidding regulations (see Exhibit "A" to the Verified Complaint) was a document circulated amongst all bidders by a representative of the Sheriff's Office before the actual Sheriff's sale. We were advised that we had to adhere to the provisions of this notice. We considered this document to be one officially prepared by the Sheriff's Office and relied upon the information contained therein before I bid. I knew that if I could not put together the necessary financing after I bid on the property that I would lose a certain amount of money, that the property could be readvertised, but it was clear and certain that I would receive the balance of my deposit if I could not complete the purchase. If I had known that my deposit was at jeopardy, I would never have considered bidding on this house.

4. I am totally unfamiliar with the bidding procedure and foreclosures. I was buying this house to move into same, and not for speculation. This whole foreclosure process was brand new to me and I very much relied upon these bidding rules in order to give me guidance through the foreclosure sale procedure.

The standard conditions of sale prepared by the Sheriff, which are read aloud prior to the auction and thereafter signed by the successful bidder contain the following pertinent language:

THIRD. - If the successful bidder neglects or refuses, for any reason, to accept and sign these conditions at the close of the sale or fails, for any reason, to pay the full price as bid and accept the Deed, the subject property shall be re-advertised and re-bid; in such case the successful bidder at the first sale shall bear the expenses of the first sale (as well as the second sale) and any balance of the purchase price or deposit on the first bid remaining in the hands of the Sheriff shall be returned to such first successful bidder within 45 days of the passing of title.

The sheriff's office has also prepared an informational sheet entitled "Monmouth County Foreclosure Procedures". This is

handed out to all prospective bidders prior to the auction sales on the advertised date. Yaniga and Marando received a copy.

The following provisions are pertinent to the issues at hand:

All sales are subject to a first mortgage, if any, and also any municipal, state or federal liens, if any. A title search will reveal this information and it is advised that this search be conducted prior to the purchase of any property as the purchaser must assume these liabilities. An attorney will be able to advise as to title search procedure.

At the time of the sale, the attorney for the Plaintiff will open the bidding at $100 and the bidding will continue until the highest bid is reached. The highest bidder will be the purchaser and shall produce 20% of his bid as deposit in cash or certified check and the balance will be due in 30 days. The Plaintiff's attorney normally does not allow the bid to go for less than the judgment amount due his client, which is the approximate amount advertised in the newspaper, and he will bid until he has reached this amount. At this point he may stop bidding and the highest bidder thereafter will be considered as the purchaser.

If for any reason the purchaser refuses to pay the balance of his bid within the 30 day period allowed him after the sale, the property will be readvertised and resold at the purchaser's expense. These costs will be deducted from the purchaser's deposit and the balance will be returned to the bidder.

These parties, admittedly, could not gather the funds required to complete the purchase. They so advised the Sheriff and requested return of their deposit. He has refused to do so having been advised by First Fidelity's lawyer that the bank would contest the turnover. Yaniga and ...

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