H. Set Aside of Sale

• Jurisdiction: New York

H. Set Aside of Sale

If the sale was improperly conducted and it is shown that the rights of a party have been prejudiced, the sale may be set aside within one year after the sale.²⁰⁴ Moreover, a court has inherent equitable power to set aside a sale upon a showing of fraud, collusion, mistake or misconduct.²⁰⁵ For example, in First Union National Bank v. Williams,²⁰⁶ the mortgagor reached a repayment agreement with the mortgagee prior to the foreclosure sale, but the mortgagee was unable to contact the referee in time to cancel the sale. A third party successfully bid on the property at an amount that was well less than the value of the property. The trial court set aside the sale on equitable grounds and its decision was affirmed by the Appellate Division. A unilateral mistake is not enough to set aside a sale. In U.S. Bank N.A. v. Testa,²⁰⁷ the plaintiff's attorney mistakenly relied on incorrect bidding instructions and allowed the property to be sold to third parties for an amount that was well less than the amount that the plaintiff wanted to bid. The court held that this unilateral mistake was not sufficient to set aside the sale.

Mere inadequacy of price is not sufficient to set aside a sale—the price must be so inadequate that it shocks the court's conscience.²⁰⁸ In the Testa case discussed above, the plaintiff also argued that the sale price of $208,133.69 was inadequate in light of proof that the property was worth $399,999. The court rejected this argument, holding that, even if it accepted plaintiff's proof of value, the bid price was not so inadequate as to shock the court's conscience.²⁰⁹

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Notes:

^[204] RPAPL § 231(6).

^[205] Alkaifi v. Celestial Church of Christ Calvary Parish, 24 A.D.3d 476, 477, 808 N.Y.S.2d 230 (2d Dep't 2005).

^[206] 45 A.D.3d 1029, 845 N.Y.S.2d 189 (3d Dep't 2007).

^[207] 140 A.D.3d 855, 33 N.Y.S.3d 387 (2d Dep't 2016).

^[208] Astoria Fed. Sav. & Loan Ass'n v. Hartridge, 58 A.D.3d 584, 869 N.Y.S.2d 921 (2d Dep't 2009).

^[209] Testa, 140 A.D.3d at 856–57.