Summary:
The Debtor’s house was sold at a foreclosure auction for $100,000, with Blue Ridge, the mortgage holder, the highest bidder. Blue Ridge then sold the house at a private sale five months later for $110,000. Blue Ridge subsequently sued the Debtors for the outstanding balance on the note, roughly $30,000. The Debtors argued that Blue Ridge violated N.C.G.S. § § 45-21.36 by bidding "substantially less" than the property was worth. The trial court granted summary judgment for Blue Ridge.
The Court of Appeals, with dissent, held that the only competent evidence of the value of the property were the $100,000 auction price, the $110,000 private sale price and an appraisal conducted for Blue Ridge showing a $109,000 value. There had been an unaccepted oral offer to purchase the property for $150,000, which the majority found to be persuasive. Based on this, the majority held that the auction price, which was within 10% of the later private sale was not "substantially less" than the true value.
The dissent in this case, started by opining that the question of whether an auction price was "substantially less" than the true value was a mixed question of fact and law and should have been decided at trial. The dissent also largely urged the development of a clear standard for determining when the foreclosure sale price is "substantially less" than the true value.
Commentary:
With the dissent, it is possible that this case could go to the North Carolina Supreme Court, where the wish by the dissent, viz. standards for when foreclosure sale price is "substantially less" than the true value, might be clarified.
I realize that when you are a hammer, the whole world looks like nails, but as a bankruptcy attorney, bankruptcy sure seems like the ultimate solution to the Debtors' plight.
For a copy of the opinion, please see:
Blue Ridge Savings Bank v. Mitchell- Foreclosure Auction Price not “Substantially Less” than True Value.PDF
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