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Adam Leitman Bailey, P.C. Preserves Auction Sale For An Innocent Purchaser

The firm was retained to represent an entity which purchased a property for valid consideration after the prior owner failed to  satisfy a mechanics lien and never sought to redeem. After the sale, the prior owner claimed that it had not been given the notice of the sale as had been directed by a prior court order. This, notwithstanding that the court notification system indicated that (i) the matter would appear in the foreclosure part on a date certain and the prior owner’s then attorney sought to adjourn the date and (ii) the prior owner and new counsel were at the courthouse on the auction date but rather than appear in the foreclosure part then stayed in the hallway of the courtroom of the judge and went to the foreclosure part after the sale had taken place.

Initially, upon the prior owner’s challenge to the sale, the matter was referred to a Special Referee to determine whether the sale price was within proper bounds (it was) and whether the prior owner had actual notice of the sale. The Special Referee found in favor of the bidder and the prior owner then sought to reject the Referee’s report. The firm, for its part, moved to confirm and after extensive argument, the trial court agreed and confirmed the report.

 On appeal, the prior owner argued that its due process rights had been violated and that the sale had to be upset because notice of the sale was not given in accordance with the prior order. Although that was true, the firm was able to convince the Appellate Division that the prior owner clearly had notice. Why else would its principal and his new counsel appear in the courthouse on the date of the auction? The firm also showed that the prior owner’s claim that it thought it needed to appear before the trial court was unsustainable in that the trial court had no pending motion and the e-courts notice clearly spelled out where one had to appear. As a result, Adam Leitman Bailey, P.C.’s client was able to reap the fruits of its purchase.

Colin E. Kaufman represented the purchaser before the Special Referee and the Supreme Court

Jeffrey R. Metz represented the purchaser before the Appellate Division, First Department

Court Appearance

Public Decision 

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