REFEREE’S ALLEGED VIOLATION OF A LOCAL COURT RULE DID NOT WARRANT SETTING ASIDE THE FORECLOSURE SALE.

The Second Department, reversing Supreme Court, determined the referee’s alleged setting of an “upset price” which violated Kings County Supreme Court Civil Term Rules did not warrant setting aside the foreclosure sale:

RPAPL 231 provides, in relevant part, that a court, within one year after a foreclosure sale, “may set the sale aside for failure to comply with the provisions of this section as to the notice, time or manner of such sale if a substantial right of a party was prejudiced by the defect” (RPAPL 231[6]). ” In the exercise of its equitable powers, a court has the discretion to set aside a foreclosure sale where there is evidence of fraud, collusion, mistake, or misconduct'” … . In order to provide a basis for setting aside a sale, the evidence of fraud, collusion, mistake, or misconduct must cast suspicion on the fairness of the sale … . Furthermore, evidence of a unilateral mistake at the foreclosure sale, without more, does not provide a basis to invalidate a sale that was otherwise lawfully conducted … , and belated and unsubstantiated claims are insufficient to establish the existence of fraud, collusion, mistake, or misconduct … . Moreover, mere irregularities by a referee may be disregarded if they do not affect a substantial right of a party … . Clinton Hill Holding 1, LLC v Kathy & Tania, Inc., 2016 NY Slip Op 05844, 1st Dept 8-24-16

FORECLOSURE (REFEREE’S ALLEGED VIOLATION OF A LOCAL COURT RULE DID NOT WARRANT SETTING ASIDE THE FORECLOSURE SALE)