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Adam Leitman Bailey, P.C. Wins Trial; Vacating Mechanics Lien Foreclosure Sale Denied

Adam Leitman Bailey, P.C. was retained to represent the purchaser in a mechanic’s lien foreclosure of a commercial building in upper Manhattan which had proceeded to auction and sale. The client was the high bidder. After Adam Leitman Bailey, P.C.’s client paid just over a million dollars and was deeded the property, the prior owner moved to vacate the sale on the grounds that it did not receive proper notice of the auction and that the sale price was unconscionable. 

The Court referred the matter to a special referee to determine two case-dispositive issues: (1) the appraised value of the premises at the time of the sale; and (2) whether the prior owner had appropriate notice of the foreclosure auction. If the prior owner had not received adequate notice of the sale or if the sale price was unconscionably low (the Court indicated below 25% of appraised value would be highly suspicious), the sale would be vacated. 

The referee conducted a multi- day hearing at which the prior owner presented its own testimony and that of an appraiser and engineer. Adam Leitman Bailey, P.C.’s client and an appraised testified in opposition. The prior owner’s appraiser posited that the value of the property was over four and a half million dollars. On cross-examination, Adam Leitman Bailey, P.C. was able to prove to the Referee that the prior owner’s appraiser and engineer had failed to consider several important issues affecting the value of the building. 

The lienor’s lawyer had not obeyed the Court’s Order to serve notice of sale on the prior owner. However, Adam Leitman Bailey, P.C. was able to show through witness testimony and cross-examination of the prior owner that the prior owner had notice of the auction, and, in fact, was present in the courthouse when and where the auction was conducted and that there was lively bidding by several prospective purchasers. 

Both parties submitted post- hearing briefs to address the two issues litigated in the hearing. 

In his 36-page report, the Referee adopted most of Adam Leitman Bailey, P.C.’s arguments and proposed findings in a detailed analysis of the evidence and witness creditability. 

On the issue of notice of the auction, the referee determined that the prior owner had sufficient notice as demonstrated by the evidence put in by Adam Leitman Bailey, P.C. The referee found that the value of the property was such that the purchase price paid by the client was 43% of the actual value on the date of sale. Both findings solidified Adam Leitman Bailey, P.C.’s position in favor of our client. 

Adam Leitman Bailey, P.C. was represented by Colin E. Kaufman and Danny Ramrattan at the trial.

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