Setting Aside a Judicial Foreclosure Sale

Arsali v. Chase Home Finance LLC, SC12-600 (Fla. July 11, 2013):

The Florida Supreme Court approved the results of the Fourth District’s decision in Arsali v. Chase Home Finance, LLC, 79 So. 3d 845 (Fla. 4th DCA 2012) to the extent the decision affirmed the judgments of the trial court. The Florida Supreme Court restated the Fourth District’s certified question of great public importance as follows:

DOES INADEQUATE BID PRICE NEED TO BE ALLEGED AND PROVEN IN ORDER TO SET ASIDE A JUDICIAL FORECLOSURE SALE?

Answering the certified question in the negative, it was held that proof of an inadequate bid price is not a necessary requirement in an action to set aside a judicial foreclosure sale. Inadequacy of consideration, surprise and fraud imposed on complainants, irregularity in the conduct of the sale, and the admission of irrelevant and incompetent testimony are all proper grounds for setting aside a judicial foreclosure sale. The mere allegation of any single factor or any specific combination of factors is insufficient for litigants to prevail. Litigants must allege one or more adequate equitable factors and make a proper showing to the trial court that they exist in order to successfully obtain an order that sets aside a judicial foreclosure sale.

Here, a final summary judgment of foreclosure was entered by the circuit court against the borrowers. Chase authorized its foreclosure counsel to offer the borrowers an opportunity for the reinstatement of their mortgage, and dismissal of the foreclosure action. The borrowers followed all conditions of Chase’s offer. However, Chase’s counsel neglected to arrange for the cancelation of the foreclosure sale with the clerk of court, so the sale took place as scheduled. A third-party purchaser submitted the winning bid.

The borrowers filed an objection to the judicial sale with the trial court pursuant to § 45.031, Florida Statutes. The objection was in the form of a motion to vacate the judicial foreclosure sale and the certificate of sale based on their fulfillment of their reinstatement with Chase. The trial court granted the borrowers’ motion to vacate. Arsali appealed to the Fourth District, arguing that the trial court erred in vacating, that the borrowers failed to show the winning bid price of $125,300 was grossly inadequate, and that an evidentiary hearing should have been held.

The Fourth District concluded there was competent, substantial evidence in the record before it to affirm the trial court’s judgments of vacation, the dismissal of the final foreclosure judgment, and that inadequacy of price need not be applied to every attempt to set aside a foreclosure sale. The evidence established that Chase and the borrowers executed a written agreement to settle the case before the judicial foreclosure sale took place.