A motion to set aside sheriff sale is a legal basis to recover properties sold at auction. In Philadelphia, owners of real estate have a legal obligation to pay taxes. If those taxes are not paid the City will enter a judgment against the property owner. If the judgments are not paid the City will eventually file a lawsuit with the court to sell your property to cover the costs of the taxes. In Philadelphia, properties are sold at sheriff sale to the highest bidder to collect on delinquent taxes. If your property is sold at sheriff sale you may have an opportunity to get it back. Speak with an attorney about filing a motion to set aside sheriff sale. A petition to set aside is a legal document filed with the court. In the petition “any party in interest” may ask a judge to set aside or cancel the sheriff sale. In Philadelphia many judges are receptive to these petitions because they understand the properties are being sold without consent of the prior owner. Many judges will state explicitly in court that the purpose of the sale is not to facilitate investment opportunities for third-party purchasers, but to generate tax revenues. Therefore, if there is “proper cause under the circumstances” to cancel the sale the judge has the authority to do so.
1. File a Timely Motion to Set Aside Sheriff Sale
A motion to set aside sheriff sale should be filed before the sheriff’s deed is recorded. See Concord Liberty Sav. and Loan As’n v. NTC Properties, 454 Pa. 472, 312, A. 2d (Pa. 1973). This means a party in interest often has four to six weeks from the date of the sheriff sale to file the petition. After the deed is recorded the sale is considered final and the court may lose authority to set aside the sale. See Pa.R.C.P. 3132 . Pursuant 53 P.S. Section 7193.3 a prior owner may bring a claim for up to ninety days from the date the deed is recorded. However, the Pennsylvania Superior Court recently held that the petition must be filed before the property is transferred. See Mortg. Elec. Registration Sys. v. Ralich, 209 Pa. Super. 163, 982 A.2d 77 (Pa. Super. 2009). Therefore, if you do not act fast you may lose the ability to set aside the sale. Speak with a Philadelphia Landlord Tenant Lawyer about whether there is still time to file the petition.
2. Petitioner Must Have Legal Standing
In order to file a motion to set aside sheriff sale, the petitioner must be a “party in interest.” Generally speaking this means the person filing the petition must have standing. A party has standing pursuant to Pa.R.C.P. 2327 where the determination of the action “may affect any legally enforceable interest” of such person who may be bound by judgment in the action. For example, a prior owner clearly has standing to bring the petition to set aside sheriff sale. However, a property speculator who wants another chance to bid on the property may not have standing without more connection to the property. Therefore, a strong defense to stopping a petition to set aside sheriff sale may be that the filer lacks standing to bring the claim. If you are a prior owner the court may allow you to intervene and file the petition to set aside.
3. Proper Cause to Set Aside
In order to set aside a sheriff sale (i.e., cancel the sheriff sale) there has to be a good reason. According to the law (Rule 3132), the court may, “upon proper cause shown, set aside the sale and order a resale or enter any order which may be just and proper under the circumstances.” The most common example of proper cause is lack of notice. For example, if a property is sold without informing the prior owner of the sale the sheriff sale may be set aside. Additionally, the City of Philadelphia is required to serve the prior owner pursuant to Pennsylvania Municipal Claims and Tax Liens Act (MCTLA), 53 P.S. Section 7101-7105. If the prior owner was unaware of the sale they may establish proper cause. Similarly, if the prior owner can prove he was making payments with the city or a negotiated agreement was entered to stop the sale, they may succeed in setting aside. Therefore, it will be the Court’s determination to evaluate whether the basis laid out in the petition to set aside is proper cause under the law.
4. Resistance From Third Party Purchaser
The third party-purchaser or party that bought the property at sheriff sale may file a petition to intervene and respond to a petition to set aside sheriff sale. Therefore it is important to consider the level of resistance when weighing whether to file a petition to set aside sheriff sale. Finally, the City may take a position on the Petition to Set Aside. If the City of Philadelphia opposes setting aside the sale they may file a brief with the Court. Their brief may provide a legal basis for why the petition to set aside lacks merit. Therefore, it is critical you speak with an attorney before filing a petition to set aside sheriff sale.
5. Settlement of Motion to Set Aside Sheriff Sale
It may be worthwhile to file the petition to set aside sheriff sale. After the petition is filed the prior owner may negotiate with the new purchaser. If the purchaser agrees to support the petition to set aside sheriff sale the Court may honor the stipulations of the parties. Therefore, consider speaking with the Third Party Purchaser and his counsel before the court hearing. If the matter settles the uncertainty of a court hearing is greatly mitigated.