This is not a revolutionary concept, but a new case reconfirms the precedent that a foreclosing plaintiff’s unilateral mistake at foreclosure sale will not be remedied – the sale result will remain. [U.S. Bank N.A. v. Martinez, 162 A.D.3d 528, 79 N.Y.S.3d 144 (1st Dept. 2018)]. This is meaningful, not because it is a surprise, but because the error continues to be made and the miscue is rarely subject to rescue.
In a way it seems unfair – certainly to the foreclosing party. They meant to bid a certain sum, things somehow went awry, clearly by virtue of error, and a third party inherits an astonishing bargain.
Is there is no way out? Yes, in extreme circumstances, but those are rarely encountered. There would have to be a mistake, coupled with some other exceptional element, such as the ultimate bid price being shocking to the conscience of the court. But this almost never happens. For a further discussion of the fact patterns and the applicable law, see 4 Bergman on New York Mortgage Foreclosures, §30.06 , LexisNexis Matthew Bender (rev. 2018).
As to the case at hand, the facts were not so unusual. Foreclosing plaintiff’s counsel somehow failed to bid higher than the last bidder, even though that sale price was lower than the plaintiff’s upset price. As the court pointed out, however “a unilateral mistake does not justify vacating a foreclosure sale.” Moreover, the bid amount which plaintiff found (understandably) offending was deemed not fundamentally unfair and not so inadequate as to shock the court’s conference.
Seeking another factor to join with the mistake, the foreclosing plaintiff pointed out that it had published in only one paper in violation of the court’s order requiring two papers. But the court found this without merit because it failed to allege that a substantial right of any party was prejudiced – therefore the publication mistake was a mere irregularity, insufficient to support vacating a sale.
This latter finding underscores the rarity of any court finding an additional factor sufficient to buttress the effect of the unilateral mistake. In the end, this case instructs, yet again, that meticulous attention to detail in the bidding process is worthy.
Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2018), is a partner with Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.