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Case of Pet-Ridden House Nudges Law on Setting Aside Foreclosure Sales
New Jersey Law Journal
September 14, 2007
In a rare defeat for caveat emptor in foreclosure sales, a judge let a winning bidder cancel the $2.6 million purchase of a house because 142 foul-smelling dogs and cats -- some living, many dead -- were found on the premises.
Bergen County Superior Court Judge Peter Doyne ruled that Michael Acciardi of Saddle River, N.J., was relieved of his obligation to buy the house next door because of conditions he discovered five days after he won the bid at an Aug. 10 sheriff's sale.
Letting successful bidders wriggle out of paying for foreclosed property is so uncommon that Doyne resorted to a 70-year-old precedent to support his Sept. 7 ruling in Wells Fargo Bank v. Philip Tamis, Ber-F-20770-04.
Sheriff's auctions can be set aside when there is fraud, accident, surprise or irregularity in the sale, under the hoary Karel v. Davis, 122 N.J. Equity 526 (E&A 1937).
Acciardi's lawyer, Gerald Salerno of Hackensack's Aronsohn Weiner & Salerno, argued the case fit the "surprise" element because Acciardi discovered from news accounts that the previous owner had used the house as an ad hoc, perhaps illegal animal shelter.
The damage from animal feces and urine was so bad that the borough condemned the house, and Salerno argued the condemnation also constituted a surprising element.
Wells Fargo Bank, which foreclosed when prior owner Philip Tamis defaulted, argued that Acciardi, as a neighbor, had a reasonable opportunity to investigate and research conditions in the house before he made his bid at the sheriff's sale.
The bank's authority was even older than the Karel case, Cropper v. Brown, 76 N.J. Eq. 406 (Chan. Court 1909), in which a court refused to vacate the sale of a house that burned down between the time it was auctioned and the time it was to be conveyed.
"Surprisingly, there is a dearth of authority exploring 'surprise' in the context presented," Doyne said. But in ruling for Acciardi he concluded, "If this instance does not constitute 'surprise' it is difficult to imagine what circumstances would."
Acciardi claimed that he asked Tamis several times before the sale if everything was "okay" inside the premises, and was told everything was "fine." Acciardi also asserted that his request to enter the premises was denied.
In rebuttal, Tamis denied that Acciardi made the request to visit and said Acciardi had an opportunity to judge conditions from the outside.
Either way, Acciardi says he didn't know how bad the house was until he saw news reports that animal welfare workers had removed 23 dead dogs and cats and had rescued more, many covered in feces and urine.
Since then, the borough has determined the home unsafe for human occupancy, and animal cruelty charges have been filed against Tamis and his wife Cynthia.
Tamis' lawyer, Santo Bonanno, who has a firm in Wayne, says his clients were pet lovers who took in strays out of concern the animals would be euthanized if rounded up by animal control workers.
The Tamises felt the animals were better off with them than at a shelter, he says, "It got a little overwhelming and they lost control."
He says Doyne's decision is problematic because it suggests that an inability to inspect a house, followed by a "surprise," is grounds for vacating a foreclosure sale.
"The court's decision could be tantamount to allowing inspection clauses in foreclosure," he says.
"It's always been caveat emptor," he says. "If you buy a piece of property, and it costs you several thousands of dollars, that's too bad."
He adds, though, "These circumstances were so unusual maybe the judge felt he should carve out an exception."
Although Doyne did not dwell on the fact that the house was condemned before the sale, that fact might have persuaded him to vacate the sale, suggests one of the bank's lawyers, Scott Sherman of Minion & Sherman in West Caldwell.
"The condemnation could have been considered an encumbrance that arose after the auction and before the delivery of the deed," Sherman says. "Those are normally the types of things, like title issues, that potentially let people get out of sales on a regular basis," he says.
But dwelling on the buyer's inability to see the property beforehand "sets a dangerous precedent only because it opens up home inspection type of issues as a fact issue," he says. "Then the question is, where's the line?"
