The Illinois Appellate Court, Second District, recently affirmed a trial court’s order vacating an initial judicial sale due to a bidding error, which resulted in a surplus, and permitting a second sale, which resulted in a deficiency.
A copy of the opinion is available at: http://www.illinoiscourts.gov/Opinions/AppellateCourt/2014/2ndDistrict/2131225.pdf
In September 2010, the bank filed a complaint seeking to foreclose on a mortgage. Although he was served, the borrower did not appear within the time allowed. In April 2011, the trial court entered a default judgment of foreclosure in the amount of $283,816.50.
In July 2011, after due notice, a judicial sale was held. The bank submitted an opening bid of $376,000.00 and was the successful bidder. Neither the bank nor the borrower moved to confirm the July 2011 judicial sale. In September 2011, the borrower filed bankruptcy.
In January 2012, the bank moved to vacate the judicial sale. No motion to confirm was pending. The bank represented that it erred in its bidding instructions, resulting in an incorrect bid. The borrower did not respond or appear at the hearing on the motion. The trial court granted the motion and vacated the sale.
In February 2012, after due notice, a second judicial sale was held. The bank was the successful bidder again, with a bid of $286,436.00. The bank moved to confirm this second sale.
The motion to confirm the second sale was set for hearing, and the borrower appeared for the first time. He argued: 1) the first sale should not have been vacated; and 2) the second sale should not be confirmed due to deficiencies in the Sheriff’s report of sale. The borrower also alleged collusion between the bank and the Sheriff’s office. The trial court granted the borrower leave to take depositions and leave for the bank to file a second amended report of sale. The borrower failed to depose anyone during the time allowed, and after the leave period expired, the trial court determined the borrower’s allegations were unfounded.
Thereafter, the borrower moved to vacate the order vacating the first sale and for an order confirming the first sale. He argued that the trial court could not vacate a properly conducted sale based on unilateral mistake. The trial court denied borrower’s motion after a hearing, finding that no motion to confirm the first sale had been filed before the motion to vacate, and finding waiver by the borrower due to his failure to appear at the hearing on the challenged motion. The borrower appealed.
On appeal, the borrower argued that the trial court erred in granting the motion to vacate the first sale. He further argued that the trial court did not have authority to vacate the sale based on the banks “unilateral mistake” and that the trial court erred in finding he waived his rights by failing to object.
The Appellate Court held that a trial court is not obligated to confirm a judicial sale until a motion to confirm the sale is filed by one of the parties. Specifically, “[a] court *** has mandatory obligations to (a) conduct a hearing on confirmation of a judicial sale where a motion to confirm has been made and notice has been given, and, (b) following the hearing, to confirm the sale. . .” Prior to a motion to confirm, “[t]he highest bid at a judicial sale is merely an irrevocable offer to buy the subject property, the acceptance of which does not take place until the court confirms the sale, before which there is no true sale in any legal sense.”
The Court held that, because neither party in this case filed a motion to confirm the first sale, the trial court’s obligation to confirm the first sale was not triggered. See Household Bank, FSB v. Lewis, 229 Ill. 2d 173 (2008) (trial court is not obligated to confirm a judicial sale and may, instead, vacate it when the party who initiated the foreclosure decides not to pursue it).
As for the borrower’s argument that it was improper for the trial court to find that he waived his right by failing to object, the Appellate Court noted that “courts routinely find that parties have intentionally relinquished known rights through their inactions.” In other words, even if the borrower was not required to do anything to claim a surplus, his silence and inaction when that surplus was jeopardized by a motion to vacate the sale resulted in a waiver of the right to object to that motion.
Accordingly, the Illinois Appellate Court, Second District affirmed the trial court’s ruling in favor of the bank.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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