Also known as:grossly inadequate · inadequate consideration
Written by attorneys · grounded in primary & secondary sources — see below
A standard governing challenges to foreclosure sales under which a price obtained in a regularly conducted proceeding does not render the foreclosure defective unless the price is so low that it shocks the conscience or indicates unfairness.
Sources & Authorities
How it applies
Common Examples
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Low Bid at Nonjudicial Sale
Greta Goldstein defaulted on a mortgage held by Golden Gate Logistics. The trustee conducted a nonjudicial foreclosure auction after satisfying every statutory notice and advertising requirement. Golden Gate Logistics submitted the only bid at roughly fifteen percent of the property's recent appraisal. Goldstein sued to set aside the sale on price grounds alone. The court upheld the sale because the proceeding was regular and the price did not meet the threshold of gross inadequacy.
Grossly Inadequate Contract Exchange
Buyer and Seller entered a contract for the sale of commercial equipment. The agreed price was less than one-fifth of the equipment's fair market value with no other indicia of unfair dealing. Buyer later sought specific performance. The court denied relief because the exchange was grossly inadequate, satisfying the standard under the Restatement.
Select any source to read its text and confirm it supports the definition.
Restatements
Casebooks
San Antonio Independent School District v. Rodriguez411 U.S. 1, 93 S. Ct. 127, 36 L. Ed. 2d 16 (1973)
Common questions
Frequently Asked
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When will a court set aside a foreclosure sale based solely on the price obtained?+
A court will set aside a regularly conducted foreclosure sale for price alone only when the price is grossly inadequate. Mere inadequacy or a price below fair market value or the debt amount does not suffice. The standard requires a price so low that it shocks the conscience or raises a presumption of unfairness.
Supporting sources
Does a foreclosure price at fifty percent of appraised value automatically qualify as grossly inadequate?+
No. A price at roughly half of a prior appraisal does not by itself establish gross inadequacy when the sale followed all required procedures. Courts recognize that foreclosure sales routinely produce discounted prices due to the forced nature of the transaction and distressed property conditions.
Supporting sources
What role does procedural regularity play in evaluating a claim of gross inadequacy?+
Procedural regularity is central. When the foreclosure complied with all statutory notice, advertising, and bidding requirements, the sale stands unless the price crosses the high threshold of gross inadequacy. Compliance shifts the focus away from ordinary price complaints and toward finality of the sale.
Supporting sources
Can a borrower successfully challenge a foreclosure sale price that equals only the land value when equipment and buildings have additional appraised worth?+
Not necessarily. If the sale was regularly conducted and market factors such as outdated equipment explain the bundled price, the result does not constitute gross inadequacy. The rule protects finality even when separate sales might have produced more in hindsight.
Supporting sources
411 U.S. 1, 93 S. Ct. 127, 36 L. Ed. 2d 16 (1973)Constitutional Law
…"adequacy" of the education guaranteed by the Foundation Program. In my view, then, it is inequality—not some notion of gross inadequacy—of educational opportunity that raises a question of denial of equal protection of the laws. I find any other approach to the issue unintelligible and without directing principle. Here,…