Friday, March 23, 2012

sheriff's sale - setting aside - gross inadequacy of price

Bank of America v. Estate of Hood - Superior Court - March 22, 2012

Rule 3132 of the Pennsylvania Rules of Civil Procedure provides as follows: Upon petition of any party in interest before delivery of the personal property or of the sheriff’s
deed to real property, the court may, upon proper cause shown, set aside the sale and order a resale or enter any other order which may be just and proper
under the circumstances. Pa.R.C.P. 3132.

Equitable considerations govern the trial court’s decision to set aside a sheriff’s sale. Bornman v. Gordon, 527 A.2d 109, 111 (Pa. Super. 1987), appeal denied, 517 Pa. 620, 538 A.2d 874 (1988). This Court will not reverse the trial court’s decision absent an abuse of discretion. Id.

As a general rule, the burden of proving circumstances warranting the exercise of the court’s equitable powers is on the applicant, and the application to set aside a sheriff’s sale may be
refused because of the insufficiency of proof to support the material allegations of the application, which are generally required to be established by clear evidence.

An abuse of discretion occurs where, for example, the trial court misapplies the law. Warmkessel v. Heffner, 17 A.3d 408, 413 (Pa. Super. 2011), appeal denied, ___ Pa. ___, 34 A.3d 833 (2011).

Gross inadequacy of the sale price: Where a sale is challenged based upon the adequacy of the price our courts have frequently said that mere inadequacy of price standing alone is not a
sufficient basis for setting aside a sheriff’s sale. However where a ‘gross inadequacy’ in the price is established courts have found proper grounds exist to set aside a sheriff’s sale. The courts have traditionally looked at each case on its own facts. It is for this reason that the term ‘grossly inadequate price’ has never been fixed by any court at any given amount or any percentage amount of the sale. Further, it is presumed that the price received at a duly advertised public sale is the highest and best obtainable. Blue Ball Nat'l Bank v. Balmer, 810 A.2d 164, 166-67 (Pa. Super. 2002) (citations omitted), appeal denied, 573 Pa. 662, 820 A.2d 702 (2003).

“The purpose of a sheriff’s sale in mortgage foreclosure proceedings is to realize out of the land, the debt, interest, and costs which are due, or have accrued to, the judgment creditor.” Provident Nat'l Bank, N.A. v. Song, 832 A.2d 1077, 1081 (Pa. Super. 2003), appeal denied, 577 Pa. 736, 848 A.2d 929 (2004). This Court has held that “the outstanding mortgage balance must be considered in determining the adequacy of the sale price.” Continental Bank v. Frank, 495 A.2d 565, 569 (Pa. Super. 1985).

Pennsylvania courts have concluded that a sheriff’s sale price is grossly inadequate where sale price was a small percentage – roughly ten percent or less – of the established market value.