Philadelphia Court Refuses To Set Aside Sheriff’s Sale

With the real estate market crashing and the recession otherwise hitting people hard, more and more properties are being subjected to sheriff’s sales every single month.

The Legal Standard for Setting Aside Sheriff’s Sales

In Rittenhouse Plaza Inc. v. Lichtman, the Philadelphia Court of Common Pleas recently explained the difficulty in setting aside a sheriff’s sale that takes place in Pennsylvania under state court rules.

Rule 3132 of the Pennsylvania Rules of Civil Procedure outlines the process in which to set aside a sheriff’s sale. Under Rule 3132, a sheriff’s sale may be set aside by petition, which must generally be filed prior to the issuance of the sheriff’s deed.

“A petition to set aside a sheriff’s sale is grounded in equitable principles and is addressed to the sound discretion of the court. The burden of proving circumstances warranting the exercise of the court’s equitable powers is on the petitioner, and the request to set aside a sheriff’s sale may be refused due to insufficient proof to support the allegations in the petition. The material allegations of the petition generally must be proved by clear evidence. After the sheriff’s deed has been delivered, the only attacks permitted on the sheriff’s sale are those based upon fraud or on lack of authority to make the sale.”

Findings in Lichtman

In Lichtman, the trial court first addressed the timeliness of the petition. According to the trial court, the petition was not filed until after the issuance of the sheriff’s deed.

While acknowledging that Rule 3132 only allows a trial court to set aside a sheriff’s sale before delivery of the deed, the trial court still inquired into whether the property owner had actual notice of the sheriff’s sale.

The trial court pointed out that the property owner was properly served with the writ of execution and notice of sale pursuant to the state court rules in effect and an order issued by the trial court allowing for alternative service on the property owner.

Since the property owner entered her appearance in the underlying lawsuit, service was made by mailing at the address listed on the appearance, in accordance with state court rules, the opinion said.

The plaintiff, in an overabundance of caution, also sought and obtained permission to serve notice by alternative means, which it did.

Most importantly, the court noted that the property owner had filed a motion to postpone the sheriff’s sale, showing she had actual notice.

Lack of Evidence and the Court’s Reasoning

The trial court looked into whether the owner established fraud or lack of authority to justify setting aside the sale.

“A sheriff’s sale may be set aside after delivery of the sheriff’s deed based on fraud or lack of authority to make the sale.” In doing so, “the petitioner must aver her claims of fraud with particularity,” the opinion said.

In denying the petition, the court believed the owner “failed to provide any clear evidence as to why the sheriff’s sale should be set aside.”

The owner only made vague claims that the sale price was inadequate. In Pennsylvania, “mere inadequacy of price is insufficient to set aside a sheriff’s sale, while gross inadequacy of price is a sufficient basis. Absent evidence of the actual or estimated value of the property sold, however, a determination of gross inadequacy cannot be made.”

The court rejected the owner's argument outright, stating there was no evidence provided of the property’s value, which made it impossible to determine gross inadequacy.

Lessons from Lichtman

The court was clearly frustrated by the owner’s attempt to re-litigate the same issues underlying the judgment. The opinion reflects the court’s disapproval of efforts to argue that the sheriff’s sale should not have occurred at all.

The decision illustrates the difficulty in setting aside a sheriff’s sale when the property owner has actual notice prior to the sale. Most courts will overlook minor procedural issues if actual notice is established.

From a practical standpoint, attempts to set aside a sheriff’s sale often only delay the inevitable. Unless the underlying judgment is satisfied, the sheriff’s sale will be rescheduled and carried out again.

Reprinted with permission from the December 15, 2010 edition of The Legal Intelligencer © 2010 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382, reprints@alm.com or visit www.almreprints.com.

Alan Nochumson