Foreclosure sale terms upheld by Appellate Court in property dispute ruling

In a recent ruling by the Appellate Division, Second Judicial Department, the court agreed with Kings County Supreme Court Justice Lawrence Knipel’s decision, upholding the denial of a motion to vacate a foreclosure sale and return a down payment.

The case, White Oak Projects v. Upreal Washington, saw 658 Washington 123, LLC, a nonparty to the original foreclosure action, appealing an order by the trial court. The trial court’s decision on May 4, 2021, denied 658 Washington 123, LLC’s motion to vacate a foreclosure sale and to reclaim a down payment it had made. The appellate court upheld this decision.

The core issue on appeal was whether the foreclosure sale’s terms, particularly regarding the payment of certain emergency repair charges, were proper. The appellant argued that these charges should have been covered by the sale’s proceeds as per the initial judgment of foreclosure and sale, which mandated that proceeds pay for priority liens like taxes, assessments, and city agency charges. 

The Appellate Division, in affirming the trial court’s decision, stated that a referee conducting a foreclosure sale does not have the authority to alter the terms of a foreclosure judgment. Since the emergency repair charges were not considered liens against the property at the time of sale, the referee could not allocate sale proceeds for their payment.