Friday, August 07, 2015

Defaulting Winning Bidder At Foreclosure Sale Scores Full Refund Of Initial Deposit Where Subsequent Auction Sale Price Exceeds Defaulting Bid Plus Resale Costs

A recent excerpt from a client alert from the North Carolina law firm PoynerSpruill LLP:
  • I. Defaulting Foreclosure Bidder Gets Full Refund

    Glass v. Zaftrin, LLC: At issue in this foreclosure was a defaulting bidder’s claim for refund of its bid deposit where there was a subsequent resale of the property at a price greater than the original bid.

    The facts were simple. Zaftrin was the high bidder at a foreclosure sale and paid its bid deposit to the Clerk. Zaftrin thereafter notified the trustee it was unable to complete the purchase, and the property was resold at a higher price. The trustee moved for an order to disburse the bid deposit back to Zaftrin, but sought to deduct the costs of resale. The trial court granted the trustee’s motion over Zaftrin’s objection.

    On appeal, the Court of Appeals reversed and awarded Zaftrin its full deposit. The court found that a “bidder in default is liable only to the extent that the final sale price is less than his bid plus the costs of sale.” In this case, the final sale price ($350,000.00) was greater than the defaulting bid ($315,000.00) plus the costs of resale ($1,469.80).
Source: NC Court of Appeals Weighs in on Multiple Creditor’s Rights Issues.

For the court ruling, see Glass v. Zaftrin, LLC, 768 S.E.2d 612 (N.C. App. 2015)

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