A Wyoming case stresses the importance of a lender attending a sheriff’s sale. In the McNeill Family Trust v. Centura Bank, 60 P.3d 1277 (Wyo. 2003), the lender filed mortgage foreclosure proceedings to recover a debt of over $87,000 secured by property with an original fair market value of $119,500.
Realizing that a junior creditor had not been notified of the foreclosure, the lender’s counsel intended to postpone the scheduled sheriff’s sale, but failed to do so. The sheriff conducted the sale without the lender or lender’s counsel being present. The sole bidder successfully purchased the property for $20,000. To obtain clean title, the sole bidder then wisely purchased the $30,000 lien of the junior creditor.
In trying to overturn the sale, the lender argued that the sale price was “unconscionably” low and the bidder was “unjustly enriched.” However, the court found that the lender had unclean hands because of the mistakes made in the foreclosure process and that the bidder should not be deprived of the property.
The court recognized the importance of the finality of a foreclosure sale and stated that foreclosure sales should only be set aside in limited circumstances. Although some states recognize comparisons of bid price fair to market values as a sole indication of whether a sale can be vacated, the Court found that the rule in Wyoming was to examine all the facts and equities of each case to determine whether there has been unjust enrichment.
The Court found that the bidder’s expenditures in purchasing the junior creditor’s lien and the lender’s potential claim against its counsel for negligence were factors supporting a decision in favor of the bidder.
Author: Jason P. Lueking (bio)
Phone: 317.464.1591
email: jlueking@bamberger.com