Also known as:grossly inadequacy · inadequate consideration
Written by attorneys · grounded in primary & secondary sources — see below
A foreclosure sale price obtained pursuant to a proceeding otherwise regularly conducted under applicable law. The price renders the foreclosure defective only when it meets the threshold of gross inadequacy.
Sources & Authorities
How it applies
Common Examples
2
Foreclosure Price Challenge
Gustavo Gutierrez defaulted on a commercial mortgage held by Glacier Energy. The lender conducted a nonjudicial foreclosure auction after complying with all statutory notice and advertising rules. Horizon Partners purchased the property for half its recent appraisal value. Gustavo moved to set aside the sale solely on the ground that the price was too low. The court denied the motion because the proceeding was regular and the price did not meet the threshold of gross inadequacy.
Duress Release Dispute
Totem Marine performed emergency towing services for Alyeska Pipeline and submitted invoices exceeding $150,000. Facing imminent foreclosure on its vessels and other assets, Totem accepted a $5,000 payment in exchange for a full release of its claims. Totem later sued to rescind the release. The court held that the grossly inadequate sum, combined with the threat of immediate financial ruin, supported a claim of economic duress.
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Restatements
Casebooks
Totem Marine Tug & Barge, Inc. v. Alyeska Pipeline Service Co.584 P.2d 15 (Alaska 1978)
Common questions
Frequently Asked
3
When does a low foreclosure price allow a court to set aside the sale?+
A regularly conducted foreclosure sale stands unless the price is grossly inadequate. Courts require a price so low that it shocks the conscience or suggests unfairness before intervening, even when the price falls well below appraised or market value.
Supporting sources
Does a price at half of appraised value automatically qualify as grossly inadequate?+
No. A substantial gap between sale price and appraisal is common in foreclosure settings and does not by itself establish gross inadequacy. The inquiry focuses on whether the price is so extreme that it indicates oppression rather than on any fixed percentage.
Supporting sources
Can a grossly inadequate price alone invalidate a foreclosure even without procedural defects?+
Yes. When the price is grossly inadequate, courts may set the sale aside despite full compliance with notice and bidding rules. The standard protects against manifest unfairness while preserving finality in ordinary cases.
Supporting sources
199 F.R.D. 61Property
…Aff., exh. J thereto at 2642. The Oneidas alleged that the U.S. breached that duty because purportedly the Oneidas received “grossly inadequate and unconscionable consideration for the sale of their lands to the State.” See id. In that ICC proceeding, the Oneidas sought damages from the U.S. for the period prior to 1951.…