Neither Rain, Nor Sleet, Nor Snow . . . Will Allow You To Set Aside A Sheriff’s Sale!

 by:  Peter J. Gallagher (@pjsgallagher)

Although the snow is (hopefully) gone for a few months, the Appellate Division recently handed down a decision that brings us back to one of the many snowstorms we had to endure this winter. In Weiss v. Porchetta, homeowners moved to vacate the sheriff's sale of their home because they claimed that a major snowfall on the day of the sale deterred a bidder from attending. The homeowners claimed that they had been working with the snow-bound bidder on a deal that would have allowed them to stay in their home. Apparently they did not have the same deal with the winning bidder at the sale. The trial court denied the motion and the Appellate Division affirmed.

 

 

Continue reading “Neither Rain, Nor Sleet, Nor Snow . . . Will Allow You To Set Aside A Sheriff’s Sale!”

When, If Ever, Is A Residential Mortgage Not “Residential” For The Purpose of Foreclosure?

     by:  Peter J. Gallagher (@pjsgallagher)

Believe it or not, this question comes up from time to time in my practice (exciting life, I know). In recent years I have prosecuted many foreclosure actions, but only commercial foreclosures. So the first question I usually ask a colleague who comes to me with a foreclosure  question is: "Is it a commercial or residential property?" When the answer starts with something like, "Well, that is actually an interesting question . . . " then I can almost guess what is coming next. Usually it is some variation of: "It is a home, but they mortgaged it to get money to start a commercial enterprise, so I want to argue that its commercial property." Unfortunately, you usually can't make that argument (at least not successfully), and the Appellate Division's recent decision in City National Bank of New Jersey v. Hodge reminded us all of that fact again.

To begin with, the differences between commercial and residential foreclosures in New Jersey are significant. Most importantly, commercial foreclosures are not subject to the Fair Foreclosure Act, including the various notice requirements that are required for residential foreclosures under the Act. Simply put, New Jersey law provides greater protections for residential owners who are about to lose their homes than they do for commercial owners who are about to lose their place of business. This means that the burdens on lenders seeking to foreclose on a residential mortgage are more demanding, if not entirely onerous.

 

Continue reading “When, If Ever, Is A Residential Mortgage Not “Residential” For The Purpose of Foreclosure?”

It’s Not “Bad Faith” For Lenders To Stick To The Terms Of Their Agreements With Borrowers

by:  Peter J. Gallagher

Today, the Appellate Division provided another reminder that it is not “bad faith” for a lender to abide by the terms of its mortgage with a borrower. In Warner v. Sovereign Bank, borrowers fell behind on their residential mortgage and contacted their lender to request a modification. While their request was under review, the lender filed a foreclosure complaint. The lender eventually denied the borrower’s request for a modification, but the two sides entered into a forbearance agreement.  

The borrowers claimed — without evidential support according to the Appellate Division — that the lender required, as a condition of its agreeing to review their request for a modification, that borrowers not list their home for sale. Therefore, after their loan modification request was denied, the borrowers sued the lender claiming, among other things, that the lender acted in bad faith by initially not allowing them to list their home for sale and for then not providing them with a timely answer about their request for a modification. The borrowers claimed that both of these actions prevented them from selling their home, which caused them to sustain a substantial loss of their equity.

 

Continue reading “It’s Not “Bad Faith” For Lenders To Stick To The Terms Of Their Agreements With Borrowers”

Funny, I didn’t see the double homicide in the seller’s disclosure!

by:  Peter J. Gallagher

 

Do sellers of real estate have a duty to warn potential buyers about murders or suicides that occurred at the property they are trying to sell?  The answer in most states, somewhat surprisingly, is no.  As MSNBC reported in a recent article, “3 BR, hot tub, 3 murders: How homicide homes hold their secrets,” only two states – Alaska and South Dakota –  require that sellers’ agents  reveal whether a homicide or suicide occurred in the property within the previous 12 months.  According to the article, five other states – Connecticut, Delaware, New Hampshire, North Dakota, and Oklahoma – require that agents “truthfully answer the question” if a prospective buyer asks about “past bloodshed.”  The article further reports on a study, which showed that so-called stigmatized homes languish for longer on the market and ultimately sell for less if their macabre history is revealed, either by sellers or through the grapevine.

Finally, lest you think potential buyers are just being overly paranoid, consider the tragic ending to the story of the man profiled in the MSNBC piece:

Days after closing on his dream home – a brick colonial near the Washington, D.C., school he was toiling to save – principal Brian Betts learned of his property’s ghastly past.

Inside the house, 11 months earlier, an intruder had shot and killed a 9-year-old girl and her father. Horrified, Betts demanded the transaction be rescinded. When that effort failed, he invited two ministers to pray over his new place. Then Betts tried to paint over the grim history, refinishing the woodwork and refurbishing the kitchen.

 Seven years later, in April 2010, a robber shot and killed Betts in his bedroom.