National City Real Estate Services v. Julian D. Tutle et al. (2014)

MEMORANDUM OF DECISION

This will serve to comply with the defendant's request that the court articulate the basis for approving a foreclosure committee's motion for the approval of the foreclosure sale of the defendant's property as well as additional disbursements.

By way of background, a foreclosure sale of the defendant's property was ordered by Judge Tyma. The order included the court's acceptance of the appraised value of $490,000, the subject encumbrance to be $135,245.72 and a subsequent encumbrance of $108,029.20.   The committee was ordered to conduct the foreclosure sale on May 25, 2013.   In its request the committee reported that there were 42 bids on the property and the highest last bid was $210,500.   The committee accepted the bid and filed a motion for approval of the sale and disbursements, which was granted by this court.

The defendants objected to the approval of the sale on the basis of the disparity between the appraised value of $490,000 and the requested approval of the highest bid for the property at the foreclosure sale being $210,500.

The plaintiffs correctly referenced Appellate Court's decisions which, in effect, found that a disparity between the appraised value and the highest accepted bid is inherent in the foreclosure sale process.   In LaSalle Bank v. Randall, the foreclosure order of sale found that the fair market value of the subject property was to be $2.2 million.   The Court affirmed the approval of the committee's request to accept a bid of $874,724.11, which was less than 40% of the value found by the court at the time the judgment, the court concluded that “other than the defendant's bald assertions, there is nothing in the record to indicate that the appraisal process was flawed.”  Id. at 34.

In First National Bank of Chicago v. Maynard, at 75 Conn.App. 355 (2003).   The other foreclosure order found the value of the subject property to be $200,000.   The highest bid for which the committee requested approval for sale was $100,000.   The defendant objected to the approval.   On the basis that the court had abused its discretion by accepting a bid of $100,000 for property appraised at $200,000.   The Court affirmed the decision of the lower court approving the request for sale by the committee.

The court noted, “the usual notion of fair market value is inconsistent with the notion of a foreclosure sale.   Fair market value is generally said to be the value that would be fixed in fair negotiations between the desirous buyer and a willing seller, neither under any undue compulsion to make a deal ․ An auction sale is not designed to reach that result because there is no opportunity for negotiations, and the seller, namely the committee appointed by the trial court, is to conduct the sale, is under compulsion to make a deal, in the sense that it is required to take the highest bid, subject only to the approval of the court ․ It is generally recognized that the grounds for which would warrant a court's refusal to approve the sale of fraud, misrepresentation, surprise or mistake (internal citations and internal quotations are omitted).   Furthermore, a foreclosure by sale may result in bids is not only less than the appraised value.   The property, but even less than the foreclosing mortgagee's, allowable expenses and taxes.”  Id., 361, 362.

This court, in approving the committee's requests for acceptance of the foreclosure bid concluded that the committee appointed by the trial court conducted the sale appropriately and with no evidence in the record indicate that the appraisal process was flawed.

GILARDI, J.T.R.

Gilardi, Richard P., J.T.R.