Also known as: foreclosure sales · foreclosure auction
Written by attorneys — see sources below.
A public sale of mortgaged property conducted after default to satisfy the secured obligation. The sale terminates the mortgagor's equity of redemption and produces proceeds applied first to sale costs and the mortgage debt. Any surplus passes to junior lienholders and then to the mortgagor while any deficiency may support a personal judgment against the mortgagor unless state law prohibits or limits it.
Fatou Fall defaulted on a mortgage held by Fulton Shipping. The foreclosure sale brought $180,000 while the debt totaled $250,000. Fulton Shipping obtained a deficiency judgment against Fatou Fall for the $70,000 difference because state law permitted it.
Frostline Textiles held an easement across land mortgaged to Foster Forge. The mortgage was recorded after the easement. When the mortgagee foreclosed and sold the land, the easement remained enforceable against the purchaser because the mortgage lacked priority over the servitude.
A judgment creditor obtained a charging order against Finn Fletcher's transferable interest in a partnership. Distributions failed to satisfy the debt within a reasonable time. The court ordered a foreclosure sale of the transferable interest. The buyer received only the economic rights and did not become a partner.
Felicia Fuentes lost her home at a foreclosure sale. State law granted a six-month redemption period. Felicia Fuentes tendered the sale price plus interest and costs before the period expired. The purchaser's title remained subject to her redemption right until the period closed.
Francisco Frost defaulted on a home mortgage during an economic emergency. State legislation temporarily extended the redemption period and stayed foreclosure sales. The mortgagee could not complete the sale until the statutory delay expired.
The Blaisdells executed a mortgage on their property in Minneapolis to the Home Building & Loan Association on August 1, 1928. The mortgage contained a valid power of sale by advertisement. After default, the mortgage was foreclosed and the property sold to the Association on May 2, 1932, for $3700.98. The period of redemption under the law then in effect was set to expire on May 2, 1933. On April 18, 1933, Minnesota enacted Chapter 339 of the Laws of 1933, known as the Mortgage Moratorium Law. The statute authorized district courts to extend the period of redemption from foreclosure sales for such additional time as the court deemed just and equitable, not beyond May 1, 1935, upon condition that the mortgagor pay a reasonable part of the income or rental value toward taxes, insurance, interest, and principal. The Blaisdells applied to the District Court of Hennepin County for an extension of the redemption period. The district court found that the reasonable rental value of the property was $40 per month and the present market value was $6000. It extended the redemption period to May 1, 1935, requiring the Blaisdells to pay $40 per month to the Association. The Supreme Court of Minnesota affirmed the order. The Home Building & Loan Association appealed to the United States Supreme Court, which reviewed the judgment sustaining the statute as applied to the preexisting mortgage.
Floyd Franklin's property faced foreclosure after an ex parte proceeding. He argued that the lack of prior notice violated due process. The court examined whether the foreclosure procedures provided adequate safeguards before depriving him of the property.
In March 1988, John F. DiGiovanni submitted an application to the Connecticut Superior Court for a prejudgment attachment in the amount of $75,000 on Brian K. Doehr's home in Meriden, Connecticut, in conjunction with a civil action for assault and battery that he was seeking to institute against Doehr. DiGiovanni had no pre-existing interest in Doehr's real estate, and the suit did not involve the property. Connecticut law authorized prejudgment attachment of real estate without prior notice or hearing upon verification by oath that there was probable cause to sustain the validity of the plaintiff's claim. DiGiovanni accompanied the application with an affidavit stating that the facts set forth in his complaint were true, that he had been willfully, wantonly and maliciously assaulted by Doehr resulting in a broken left wrist, an ecchymosis to his right eye, and other injuries, and that he had expended sums for medical care and treatment. The affidavit concluded that these facts were sufficient to show probable cause that judgment would be rendered for the plaintiff. On March 17, 1988, the Superior Court judge found probable cause to sustain the validity of the claim and ordered the attachment on Doehr's home to the value of $75,000. The sheriff attached the property on March 21, 1988. Doehr first learned of the attachment after it had been recorded on the land records. He had not yet been served with the complaint. The attachment notice informed Doehr of his right to a hearing to claim that no probable cause existed, to request that the attachment be vacated or modified or a bond substituted, or to claim that some portion of the property was exempt. Doehr filed suit in the United States District Court for the District of Connecticut claiming that the Connecticut statute violated the Due Process Clause of the Fourteenth Amendment. The District Court granted summary judgment upholding the statute. The Court of Appeals for the Second Circuit reversed. The Supreme Court granted certiorari to resolve the conflict of authority regarding the statute's constitutionality.
The surplus is applied to junior liens in order of priority before any remainder reaches the mortgagor. The purchaser at the sale takes the property free of the foreclosed mortgage but subject to any senior liens that were not foreclosed.
No. An easement created before the mortgage survives the foreclosure sale because the mortgagee lacked priority over the servitude. The purchaser takes subject to the easement.
Syllabus The Minnesota Mortgage Moratorium Law, which authorized the state courts to extend the period of redemption from foreclosure sales for a limited time during the economic emergency of the Great Depression, did not violate the Contracts Clause of the Federal Constitution (Art. I, § 10), as the legislation was a…
Majority opinion Opinion of Justice Gants After foreclosing on two properties and purchasing the properties back at the foreclosure sales
…loan approach, the presumptive contract rate approach improperly focuses on the creditor's potential use of the proceeds of a foreclosure sale. In addition, although the approach permits a debtor to introduce some evidence about each creditor, thereby enabling the court to tailor the interest rate more closely to the creditor's…
No. The purchaser obtains only the transferable interest and does not become a partner. The former partner loses all economic rights in the partnership.
Statutory redemption arises after the foreclosure sale and allows the mortgagor to repurchase the property by paying the sale price plus interest and costs within a set period. The equity of redemption ends at the foreclosure sale.
Yes. Legislation that extends redemption periods and stays sales for a limited time has been upheld when it addresses a public emergency and provides reasonable conditions such as payment of reasonable rental value.
A foreclosure that deprives a person of property must afford adequate notice and an opportunity to be heard. Ex parte procedures that lack sufficient safeguards may violate due process.